Transnet’s international investors ‘confirm bankability of South African infrastructure projects’

Transnet raised 12.5 billion rand (ZAR) ($901 million) in the six months up to 30 September 2015, according to latest figures (3-page / 224 KB PDF).

Funding sources included the China Development Bank and the German government’s KfW Development Bank group, in addition to ZAR 2.33bn of commercial paper issuance and a domestic bond issue of ZAR 2.83bn, Transnet said.

Over the same period, Transnet said it spent more than ZAR 16.1bn on its "ground-breaking infrastructure investment programme". The company said its total infrastructure investment from 2012 to date now stands at "an unprecedented" ZAR 108.9bn

However, Transnet said it "continues to ensure that its spend matches validated demand".

Transnet’s revenue over the reporting period increased by 6.4% to ZAR 32.2bn, driven in part by "higher volumes at ports, particularly in the bulk and break-bulk sectors", which increased by 11.8% to 50.3 million tonnes.

In addition, Transnet said "automotive volumes increased by 23% to 389,203 units, while container volumes at our port terminals rose 2.3%".

Transnet Pipelines, formerly known as Petronet, which runs South Africa’s strategic pipeline assets, "increased petroleum volumes by 6%... due to higher crude oil transported as refineries boosted inland production to ensure security of supply", Transnet said.

Transnet’s freight demand forecast (28-page / 1.23 MB PDF), published in 2014, projected that demand for freight transportation is expected to grow from 762 to 1,954 million tonnes per annum over the next 20 years. Transnet said this represented an increase in volume of around 150%. By 2043, manufactured freight will represent more than 64% of all goods transported while mining freight is expected to be about 26%.

The company announced last year that it had signed "the biggest locomotive supply contract in the country’s history” with the involvement of Chinese and South African firms. Transnet said the acquisition contract for the 1,064 locomotives, worth around $4.2bn, was South Africa’s single biggest infrastructure investment initiative by a corporate to date and was designed to support government efforts aimed at 'road-to-rail migration'.

Last March, Transnet secured around $1bn in combined funding (7-page / 128 KB PDF) from various funders and financial institutions from Canada, the US and South Africa to support its locomotive purchase programme.

In June, the Development Bank of Southern Africa agreed to provide funding and expertise to help Transnet boost private sector participation (PSP) in its infrastructure investment programme. The bank said it would also "share in project preparation funding, contribute financial and project management skills and capacity... and provide strategic support for the execution of Transnet’s PSP programme".