Transnet secures R2.2bil French loan

Thursday, November 26, 2009

Pretoria - Transnet has signed a R2.2 billion loan agreement with Agence Fran±aise de D,veloppement Group (AFD and Proparco) to partly fund the expansion of Cape Town harbour's container terminal.

"We are pleased at this historic partnership. This is by far the largest single funding initiative for one project," Transnet acting Chief Executive Office (CEO) Chris Wells said in Cape Town earlier this week.

The transaction is in line with the company's strategy to diversify funding sources and investors for its investment programme, reports

The expansion of the harbour is expected to cost R4.6 billion.

"Apart from being a vote of confidence to Transnet's sound management of its investment programme, especially the rigorous risk management framework, it is also a testimony to the attractiveness and bankability of all the projects we are undertaking as part of our five-year capital programme," said Wells.

The loan, which is repayable over 15 years with a three-year capital grace period, will see the port's container terminal capacity increased to 1.4 million TEUs per year by 2012. It also forms part of Transnet's R80 billion capital expenditure programme.

The work involves the deepening of the entrance channel, the basin, the refurbishment of the berths, the replacement of container handling equipment and acquisition of new equipment. It also involves the reconfiguration of onshore areas to provide additional stack capacity and to improve land access.

The conclusion of the loan agreement follows a thorough due diligence by AFD officials of the Cape Town Container Terminal expansion project.

"The AFD is a full supporter of Transnet's expansion plans," said AFD Chief Executive Jean-Michel Severino. "We believe this will build the port's capability to meet the growing capacity demand."

He said the agency was also confident that the agreement would play a major a role in stimulating the South African economy and sustaining the jobs for South Africans working at the ports and the construction companies implementing the project.

"Furthermore, the investment in the port of Cape Town fulfils a key component of AFD's country partnership strategy for 2009-2011," he said.

"This addresses our aim to reinforce South Africa's productive sector for providing financial support for investment programmes that have been developed by [the country's state-owned enterprises]."