Transnet needs to repay R99.6 billion.
South Africa’s struggling state-owned logistics company, Transnet, has gone from being warned that it might run out of money in the next months to securing millions of rands in support from the government.
The troubled state ports and freight railway operator went from facing threats of a massive strike that would cost it billions in lost operations to getting the union representing most of the workers to stand down and accept the salary increase offer on the table.
Weeks after receiving approval of R51 billion guarantee support from the Minister of Transport, Barbara Creecy, another financial commitment has been made.
More money for Transnet
Creecy said on Thursday that Transnet will receive additional guarantees to settle all its outstanding debt and execute its capital-investment programme.
The department of transport will give an update on the additional support after the process has been finalised on 25 July 2025. Transnet needs to repay R99.6 billion.
“The government will monitor the performance of Transnet to ensure it provides adequate support to it as it implements the reforms required by the government,” said the department.
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Transnet’s 2023 financial guarantee
In 2023, Transnet was given a R47 billion guarantee to support the entity in meeting its debt obligations, the same reason being offered two years later.
The government’s decision to offer Transnet support may be prompted by Moody’s Ratings Agency’s warning in May that the entity would run out of money in less than three months, unless bailouts are provided.
Challenges at the troubled entity stem from a lack of infrastructure maintenance, inadequate investment in necessary infrastructure and a lack of focus on generating revenue.
Despite improved support since 2023, Moody’s said progress remains slower than planned, to some extent due to the continued high occurrence of theft, vandalism and adverse weather conditions.
Transnet’s debt burden remains excessively high, resulting in unsustainable interest payments.
World Bank loan
Earlier in the week, the World Bank announced it had approved a $1.5 billion (about R26.5 billion) loan, the bulk of which is expected to be directed towards reviving Eskom and Transnet.
The bank said the objective of the freight transport sector reforms is to support the government’s efforts to transform the sector’s structure from a public monopoly to a competitive market.
At the heart of the reform is unbundling the struggling Transnet.
“To build the legal and institutional foundations required for transforming the sector, the authorities have focused their attention on establishing an independent transport economic regulator to ensure fair and open access to private operators and unbundling Transnet to allow for train operators to enter the market.”
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Massive strike
Transnet received threats from the union representing most of its workers, the United National Transport Union (Untu), that it does not mind bringing the sector to a standstill if its members do not receive a salary increase they deserve.
On Thursday afternoon, the union announced that it has accepted the increase proposed by Transnet, as expressed by its members.
“As the majority union representing the voices of more than 26 000 employees at Transnet, Untu confirms that this newly signed agreement supersedes the previous agreement signed between Transnet and the minority union, South African Transport and Allied Workers Union (Satawu).”
Salary increase
Transnet had initially proposed a salary increase of 6% this year, 6% in 2026 and 5.5% in 2027, while Untu was requesting a 10% increase. Satawu accepted the initial proposed offer.
Due to the Commission for Conciliation, Mediation and Arbitration (CCMA) intervention, a new offer was made, a three-year agreement that will commence on 1 April 2025 and will end on 31 March 2028. Each year, all Transnet employees will receive a 6% increase.
This is the offer Untu ended up accepting. The union said the agreement “places a strong emphasis on job security by including a firm non-mandatory retrenchment clause”.
Additionally, Untu members will receive back payment for the increase from 1 April 2025, as they were not eligible for the increase when Satawu members received it.
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