Transnet launches R300bn infrastructure investment plan

Thursday, April 12, 2012

Pretoria - Transnet has launched a R300 billion infrastructure plan that is set to create 588 000 new jobs in the South African economy.

Through its Market Demand Strategy (MDS) the company, which is the custodian of rail, ports and pipelines, will spend R300 billion on capital projects over a seven-year period.

The strategy, said the company earlier this week, is aimed at expanding the country's rails, port and pipeline infrastructure. This will result in an increase in freight volumes especially for commodities like iron ore, coal and manganese.

It will also lead to a significant modal shift from road to rail transport.

The MDS is the centrepiece of government's growth strategy through investment in infrastructure and a key component of enabling the targets of the New Growth Path (NGP).

The MDS will catapult Transnet Freight Rail (TFR), which has the lion's share of the investment programme, into the world's fifth biggest rail freight company. During the seven-year period, rail volumes will increase from approximately 200 million tons to 350 million tons.

It is expected that by 2019, TFR will increase its market share of container traffic from the current 79% to 92%.

The increase will have a major impact on reducing the cost of doing business. Studies conducted by Transnet show that rail in South Africa is on average 75% cheaper than road transport, Transnet said.

The company will spend R205 billion on rail projects, while also spending R151 billion on general freight business.

By 2018/19, R7.7 billion will be spent on skills development. One of the other highlights of the MDS is that it will assist with growth of the local industry through practical procurement, 50% of the R78 billion set aside for locomotives will be spent on local suppliers.

"The successful implementation of the MDS will see Transnet's revenue almost triple from R46 billion to R128 billion over the next seven years, driven by strong volume growth."

The MDS is expected to meet the NGP objectives, which include skills development and youth employment.

In his State of the Nation, President Jacob Zuma announced a plan to increase infrastructure. Government is currently looking at rolling out 43 major infrastructure projects worth R3.2 trillion in spending.

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