Economists had expected Finance Minister Enoch Godongwana to make an announcement in the Medium-Term Budget Policy Statement (MTBPS) on Transnet’s reported request for R100 billion debt relief.
Treasury officials in the session provided for the media to ask questions said it took 18 months to negotiate Eskom’s debt relief. It was announced in the February 2023 Budget even though President Cyril Ramaphosa had said on July 25, 2022 that there was a commitment in principle to move a portion of Eskom’s R400bn debt to the sovereign balance sheet, details of which would be announced in the October 2022 MTBPS.
Treasury said since 2018, Transnet Freight Rail had consistently transported fewer volumes than targeted. This resulted in rail transport payload declining by 12.0% in 2022 after a 6.9% fall in 2021 and a 11.1% drop in 2020, while road transport surged by 25.0% in 2022 after growing by 10.4% in 2021.
This meant that the percentage transported by rail fell to 15.6% of the total land transport payload in 2022 from 20.6% in 2021 and 23.5% in 2020. Transnet’s strategic plan was to have a 30% share of land transport.
The collapse in rail transport had many causes and included operational failures, increased theft and vandalism, reduced locomotive availability and the poor condition of infrastructure resulting from underinvestment.
Coal and iron ore exports forgone as a result of operational failures could have added 1.3 percentage points to the current account balance in 2022, resulting in a current account surplus.
Treasury estimated that the cost of rail inefficiencies in 2022 was R411bn and in 2023 it is estimated at some R350bn. Fewer exports meant that mining companies had less revenue and this then also reduced tax receipts.