More than 35,000 mining jobs are on the line, Transnet was sinking fast and the government needed to make the parastatal as much of a priority as it did Eskom, Cosatu acting national spokesperson Matthew Parks said on Wednesday.
He said the country no longer had time to wait for a new CEO to be appointed to Transnet, nor could it afford a similar situation to occur as what happened at Eskom, where it had taken a year to fill the position of CEO. He said the actions taken by the government to fix the problems at Eskom appeared to be bearing fruit.
He said Transnet was “in a deep crisis” through mismanagement and corruption, and the situation had not improved in the more than two years that the previous CEO, Portia Derby, had been in office, before her surprise resignation announcement on Friday, which was why Cosatu had previously called for her resignation and had welcomed the announcement, he said.
The Federation of Unions of South Africa (Fedusa) and its affiliate, the United National Transport Union (Untu) said in a statement they too were “deeply concerned” about the state of the state-owned rail, port and pipeline company, and they believed that “fraud, corruption, and mismanagement have played a significant role in its near collapse”.
The decline of the state’s key transport utility continued this week, with reports that Transnet had purchased hundreds of breathalyser straws for R29 each, even though they cost just 28 cents per straw. And while corruption in state-owned organisations barely bat eyelids any more, more serious was a report released yesterday by professional services firm PricewaterhouseCoopers (PwC).
The PwC study found that profit for the mining industry had halved in the past year, and rail network problems were a major reason, apart from lower commodity prices, load shedding and higher costs. This profit decline was likely to result in R24 billion less paid to the state in the form of taxes from mining companies, PwC said.
Parks said mining groups had signalled their intention to retrench up to 35,000 jobs in the short term, and mining groups were no longer able to get their commodities on to trains and out of the ports to be able to export.
Speaking about South Africa’s rail problems, Parks said: “Mining has missed two commodity booms already. We can’t continue the way we are…next year’s Budget (February 2024) is going to be too late to announce the changes that were required.“
Untu said it wanted the Transnet board to quickly appoint a competent group CEO, as it did not believe the acting CEO, Michelle Phillips, whose appointment was announced only on Friday, was up to the task.
Phillips was appointed after Friday’s surprise announcement that Derby would step down, effective from October 31. Untu said Phillips was currently managing the smallest operating division within Transnet, Transnet Pipelines (TPL).
“Given the serious challenges Transnet is facing, we are of the view that someone with extensive institutional knowledge, skills and expertise must be chosen to lead the organisation and implement an effective turnaround strategy, the union, which is an affiliate of Fedusa, said.
“Phillips was previously the head of Transnet Port Terminals (TPT), where there were reportedly numerous performance issues, including a backlog in the movement of merchandise that led to an uproar in the citrus industry in 2020,” Untu said.
The union had written a letter at the time, expressing concerns that Phillips had purchased two new cranes worth R80 million each, but failed to ensure that TPT employees were trained to operate them.
“This is not an attack on Phillips, but rather an example of our lack of confidence in her ability to manage Transnet Freight Rail (TFR), one of Transnet's largest and most profitable operating divisions, given her limited experience in rail and or even Transnet Engineering (TE),” the union said.
“Transnet mustn't leave the GCE position vacant for too long, given the current dire situation,” the union said.
Transnet has also reported big financial losses, with the results for the year to end-March 2023 showing a loss of R5.7 billion, and the utility citing the inefficiencies of its rail network as a major reason.
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