DEPARTMENT: PUBLIC ENTERPRISES
REPUBLIC OF SOUTH AFRICA
NCOP
QUESTION FOR WRITTEN REPLY
QUESTION NO.:326
DATE OF PUBLICATION: 03 September 2010
326. Mr D B Feldman (COPE-Gauteng) to ask the Minister of Public
Enterprises:
Whether the Government is taking any action to restore the reputation of
Transnet as the company is finding it increasingly difficult to qualify for
financial assistance from various institutions; if not, why not; if so,
what measures are in place to ensure that other state owned enterprises do
not lose their ability to deliver services as a result of the inability to
qualify for financial assistance? CW421E
REPLY
Transnetâs balance sheet has been resilient and credible since the turn-
around strategy of the Company was introduced and effectively implemented
from 2005. The strong financial performance has allowed Transnet to
consistently maintain its credit rating at investment grade to enable
access to various markets and sources of funding to meet its funding
requirement.
Transnet has therefore been able to obtain funding for its Capital
Investment programme through the following diverse sources of funding:
⢠Domestic Capital Market, issuing of bonds, commercial paper and
domestic bank loans;
⢠Development Finance Institutionsâ loans;
⢠Export Credit Agency supported funding; and
⢠International Debt capital markets.
In order for Transnet to continue to access these funding sources, it is
important for the Company to maintain its investment grade credit rating
and this is done by ensuring that its financial metrics, cash interest
cover and gearing are always maintained within the set limits.
In addition to SOE initiatives to secure funding:
⢠the Department of Public Enterprises (DPE) is exploring a number of
sources of capital to fund the investment programmes, including:
⢠using retained earnings (profits) as capital investment for future
programmes and leveraging them with debt;
⢠additional equity injections from the fiscus â either as direct capital
or as loan guarantees;
⢠leveraging capital investment in specific projects or capacities from
large customers;
⢠entering into compacts with large financial institutions (banks,
insurance companies, pension funds etc) to establish specialised quasi-
capital instruments, and;
⢠encouraging private sector investment as either SOE strategic equity
partners or as competitors.