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South Africa’s Finance Minister Weighs Transnet Cash Injection

South Africa’s National Treasury is considering whether a cash injection is needed to fully fix state port and rail company Transnet SOC Ltd., Finance Minister Enoch Godongwana said.

Derailments, equipment shortages, vandalism, corruption and poor weather have hobbled Transnet’s operations. That’s prompted companies to cut thousands of jobs to reduce costs as commodities pile up at warehouses and ports. The Treasury agreed last month to provide a 47-billion rand ($2.5 billion) support package to the company, making about half of the amount accessible to meet immediate debt obligations.

South African Finance Minister Enoch Godongwana Pre-Davos News Conference
Enoch Godongwana on Jan. 11.Photographer: Waldo Swiegers/Bloomberg

What’s needed to fix Transnet — which has a 130 billion-rand debt pile — and improve its logistics network “will inform whether we do the injection or not,” Godongwana told reporters in Johannesburg on Thursday at a pre-World Economic Forum briefing. “We’re still doing the numbers.”

Inefficiencies at Transnet have resulted in deliveries from coal mines on the company’s rail network to the nation’s main coal-export terminal dropping to the lowest level in three decades. Ports have become clogged with vessels, partly due to extreme weather that’s damaged equipment.

“We need logistics to work because it’s quite critical for the economy,” Godongwana said.