South Africa’s ruling party, the African National Congress (ANC), plans to request the National Treasury to implement a one-off debt-relief package for state-owned rail and ports operator Transnet ahead of the February budget announcement.
According to Zuko Godlimpi, Deputy Head of the ANC’s Economic Transformation Committee, Transnet requires support akin to the R254-billion debt-relief package granted to Eskom Holdings in 2023.
Godlimpi emphasized that Transnet’s efficient operation is critical to sustaining key industries such as steel, mining, and manufacturing.
“We need something massive for Transnet, once off, because its survival and efficient operation are vital for the South African economy.
We don’t have the option not to rescue Transnet,” said Godlimpi during a policy-strategy meeting on Sunday.
Finance Minister Enoch Godongwana, a member of the ANC’s economic transformation committee, is set to deliver his annual budget statement on February 19.
While Godongwana has previously resisted new bailouts for struggling state-owned enterprises unless they demonstrate operational improvements, the urgency for Transnet’s revival may prompt reconsideration.
Transnet’s inefficiencies have taken a significant toll on South Africa’s economy. The Treasury estimates rail challenges alone cost the economy over R400 billion in 2022, while the Minerals Council of South Africa reported a R50-billion shortfall in mining export targets.
Transnet, which holds R138 billion in debt, also manages ports ranked among the least efficient globally.
Godlimpi cited Eskom’s recovery following its debt-relief package as a model for Transnet. The intervention allowed Eskom to make targeted infrastructure improvements, leading to over 300 days without unplanned power cuts, a stark contrast to 15 years of persistent blackouts that had previously weighed on the economy.
The upcoming two-day strategy meeting, or “lekgotla,” starting January 29, will lay the groundwork for next month’s budget statement.
This will also mark the first budget presentation since the ANC entered a coalition government following its loss of an outright majority in last year’s election.
The ANC’s push for Transnet’s rescue reflects growing pressure to stabilize key infrastructure sectors that underpin South Africa’s economic performance.
Whether the Treasury will approve another large-scale bailout remains to be seen, as the government balances fiscal constraints with the need to revitalize its ailing state-owned enterprises.
