South African, Minister of Finance, Enoch Godongwana has announced plans to spend R402 billion on the transport and logistics sectors under the 2025 budget.
In transport, the South African National Roads Agency (SANRAL) will spend R100 billion over the medium term to keep the national road network in good condition, the minister stated.
Godongwana said the Passenger Rail Agency of South Africa (PRASA) is making steady progress to rebuild infrastructure to provide affordable commuter rail services. To sustain this progress, the ministry has provisionally allocated an additional R19.2 billion over the medium term for critical signalling upgrades, he said. This will enable commuters from areas like Mamelodi, Kwa-Mashu, Motherwell and Khayelitsha to catch a train every 10 minutes, to get to and from work and significantly reduce the money that low-income households spend on transport.
The minister added that the allocation will also allow PRASA to maximise the potential of the 241 new trains delivered through the rolling stock renewal programme.
Despite the progress made, Godongwana believes that PRASA’s procurement system needs strengthening. The management of the entity have already instituted measures to strengthen their procurement weaknesses. This includes getting support from the National Treasury to build capacity and mitigate risks and undertaking live audits for large procurement projects.
National Treasury budget documents also show that Transnet is addressing a years‐long financial and operational decline. Rail volumes fell from 226.3 million tonnes in 2017/18 to 151.7 million tonnes in 2023/24 due to derailments, inefficiency and infrastructure damage.
Transnet has made some progress in implementing its recovery plan, and estimates indicate that rail volumes will reach 165.4 million tonnes by the end of 2024/25, the Treasury said.
In 2023/24, Transnet reported a net loss of R7.3 billion, relative to R5.1 billion in 2022/23, largely due to increased finance costs. Additional debt and higher interest rates pushed finance costs to R14.3 billion in 2023/24, placing further strain on cash flows.
Transnet’s earnings before interest, taxes, depreciation and amortisation declined from R22.8 billion in 2022/23 to R22 billion. Revenue gains were offset by rising net operating expenses.
The Treasury stated that Transnet needs to stabilise and reduce its debt. Since 2018, Transnet has shifted funds from capital expenditure to debt servicing.
The South African government provided a R47 billion guarantee in December 2023, which Transnet used to refinance maturing debt and take on new debt.
The government is now providing direct support to critical infrastructure projects, such as the expansion of the land‐side container terminal in Cape Town, while avoiding debt relief or general balance sheet support.
Total borrowing increased by R7.6 billion to R137.7 billion between March 2023 and March 2024, underscoring the need for better debt management.
Written for Railways Africa by Chamwe Kaira
