Transnet may have to curb capex

Transnet to cut budget if economic growth is found disappointing

Transnet to cut budget if economic growth is found disappointing
Train tracks

Transnet may have to cut its planned R300-billion capital expenditure programme by R50bn if economic growth proved disappointing or strikes affected the sector, chief executive Brian Molefe told investors at a conference hosted by the Bank of America Merrill Lynch on 11 March.

At present, there were no plans to curtail the programme, scheduled to take place over the coming seven years, he added.

Last year, Transnet announced it intends to spend R300bn on an investment programme, part of which seeks to procure 1 000 additional locomotives over the coming seven years. The programme involves major investments in railways (R201bn), harbours (R47bn), port terminals (R33bn), pipelines (R11bn) and rail engineering works (R4bn).

"We may have to cut the capex programme by R50bn, but so far we are not taking the decision ... at the moment I think it is unlikely," he said, according to a Business Day report.

But if it comes to that, it will mean some extra breathing space for the South African trucking industry, which is faced with the threat of seeing more bulk freight move back to rail, as is intended in terms of the government’s National Development Plan (NDP) and its national freight logistics initiatives.

Transnet’s road, rail and port expansion projects are the backbone of the government’s ambitious infrastructure spending plans, and are aimed at boosting economic growth and investment.

Earlier this month, Molefe said Transnet’s plans were premised on an annual economic growth rate of about 3%. The economy expanded by 2.5% last year and is expected to pick up slightly to 2.7% this year before accelerating to 3.5% next year.

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