Impact of corporatisation delays process

Transnet needs to be shielded from negative consequences

SOUTH AFRICA: The long-awaited corporatisation of Transnet National Ports Authority (TNPA) is being delayed in order to ensure that Transnet SOC is not negatively impacted by the process.

“It (corporatisation) is an involved and intricate process,” Chief Financial Officer of TNPA, Lionel Billings told delegates at the Cape Town session of the Ports Regulator of South Africa’s (PRSA) consultations on the Authority’s tariff applications.

PRSA has spent the week engaging with stakeholders around the country and will conclude the sessions in Johannesburg today.

Explaining that all borrowings made by Transnet SOC divisions have included the TNPA, Billings acknowledged that he had to eat a bit of “humble pie” having told the 2022 tariff consultation sessions that the corporatisation was imminent.

“The corporatisation was approved by the minister a year ago, but additional matters came to the fore that have to be resolved,” he said.

While recognising that the process is a relatively simple one for TNPA, the issues of control and consolidation make it more complicated for the Transnet Group.

“When TNPA is ringfenced and corporatised National Treasury would have to ensure that Transnet is in no worse position,” he said explaining that the Group has raised funds with the TNPA balance sheet incorporated into its financials.

The concern is that, by removing control of TNPA from the Group, Transnet will no longer be in the position to consolidate the Authority’s results into their financial statements. “The consequence could be catastrophic and detrimental to Transnet,” said Billings who advised that this could be in contravention of current loan contracts.

The Ports Regulator extended an invitation to port users and interested parties to attend public hearings on the NPA's tariff application for 2024/25 - 2026/27. The sessions were held throughout the week in Durban, Cape Town, Gqeberha and Johannesburg.

Comments on the tariff applications must be submitted to the Ports Regulator by the 3 November 2023.

CAPTION: Chief Financial Officer of TNPA, Lionel Billings addresses delegates at the Cape Town session of the Ports Regulator of South Africa's consultations on the Port Authority's tariff applications.