Labour discontent brews at Transnet over recruitment practices

The government advanced Transnet a R47 billion guarantee facility last year. File: Independent Newspapers

The government advanced Transnet a R47 billion guarantee facility last year. File: Independent Newspapers

Published Feb 18, 2024


MANAGEMENT at Transnet this week told disgruntled employees, who complained of unfair recruitment practices at the ports terminals unit, that no one was willing to advance money to the ailing rail and ports operator.

The National Business Committee for Transnet Port Terminals and National People Management held a meeting at the Ngqura container terminal this week where management informed labour that the funding did not constitute a cash advancement, but a facility to guarantee borrowings for the parastatal.

The dispute arises as Finance Minister Enoch Godongwana delivers the Budget on Wednesday, in which economists, including Standard Chartered, have forecast Treasury to offer additional budgetary support to the ailing parastatal.Last year the government advanced Transnet a R47 billion guarantee facility.

Management also emphasised that any “more debt that the company takes on the higher the interest rates would be on the loans/debt” that is incurred, said the United National Transport Union (Untu) in a statement following last week’s meetings between the two parties.

During the meetings, the labour representatives raised allegations of corruption in the appointment of employees in pursuit of implementation of the four-shift pattern at the company. Management of Transnet Port Terminals responded that they had launched an investigation into employee recruitment.

Management had requested external service providers to assist in the recruitment of employees to fill in vacancies for the company top be in line with the four-shift pattern.

Additional issues were raised regarding the need for greater insourcing of services such as cleaning as opposed to the current situation where the parastatal subcontracts to outside companies instead of using port workers.

“Labour also presented ways in which Transnet can generate extra income by selling off all the scrap that is piled up at the ports. Labour raised issues of the shortage of spares and management agreed that this issue needs to be urgently addressed,” said Untu.

Although Transnet’s inefficiencies across rail and ports continues to impact on movement of goods for South African companies, with the mining and manufacturing sectors hardest hit, the Transnet Port Terminals and Transnet Pipelines are now “exceeding their revenue targets” although management is still comparing actual results to the turnaround plan targets that Transnet Port Terminals submitted”.

In his 100-day presentation in October last year, Transnet board chairperson, Andile Sangqu, said the logistics company was on the path to recovery after his board’s appointment in July amid “the most challenging times” in the company’s history.

Although the R47bn guarantee facility was advanced after the Mid-Term Budget Policy Statement last year, economists at Standard Chartered believe there is a possibility that Finance Minister Enoch Godongwana will offer additional support for Transnet when he delivers the Budget statement next week.

“The market expects that further support in the Budget – likely in the form of an equity injection or conditional debt relief – may be unavoidable given the threat to growth from weak infrastructure. However, this will require Transnet to rapidly formulate a reform plan,” Standard Chartered economists said.

The government has committed to sort out the inefficiencies and corruption at Transnet but it appears that the logistics parastatal is in need of capital injection.

“Resolving Transnet’s port and rail infrastructure bottlenecks which currently impede South Africa’s ability to export bulk commodities will be a key reform focus in 2024. Deteriorating port and rail infrastructure has weakened growth,” added Standard Chartered.

Ratings agency Moody’s had placed Transnet on watch for downgrade in view of its weakening liquidity profile, with debt maturities of R10bn due by March 2024.