CAPE TOWN (Reuters) – South African logistics group Transnet’s rail freight volumes could reach 160 million to 165 million tons in the year to end March, its CEO said on Tuesday, ahead of last year but short of a 170 million ton target set as part of its recovery plan.
The group has struggled to provide adequate freight rail and port services because of equipment shortages and maintenance backlogs after years of under-investment, with rampant cable theft and vandalism also damaging the network.
CEO Michelle Phillips told a panel at Africa’s annual Mining Indaba in Cape Town that rail volumes are recovering.
“You’ll see that to date we are 9 million tons above where we were last year,” Phillips said. “So the 170 (million tons) target, it looks like we will end up between 160 (and) we’re trying to move closer to the 165 target.”
Transnet transported 151.7 million tons of freight by rail in the last financial year, putting expected growth this year at between 5.5% and 8.8%.
Phillips said the target for volumes to hit 170 million tons is now becoming more manageable, although challenges such as lack of funding to fix the rail network still exist.
In a move to open up South Africa’s rail network to third-party investment, Transnet in December issued a final statement outlining terms and conditions for its privatization.
That will help the company cut its vast debt, increase the freight volumes in the network, and ultimately improve the South African economy, according to law firm Cliffe Dekker Hofmeyr.
The Minister of Transport said at the time it would help the country reach the government’s target of transporting 250 million tons of freight per annum in the next five years.
“We need funding, resources and skills that the private sector has,” Phillips said.
(Reporting by Nqobile Dludla; Editing by Jan Harvey)
