South African Government Approves $2.83B Guarantee for Transnet

The South African government has approved a $2.83 billion guarantee for Transnet to support its capital investments and debt obligations, reinforcing its role in the nation’s economic growth. This is reported by the railway transport news portal Railway Supply.

Transnet’s Strategic Role in Economic Development

Transnet plays a pivotal role in South Africa’s economy, facilitating the movement of goods and contributing to inclusive growth. The newly approved guarantee will enable Transnet to refinance maturing debt and maintain operational liquidity, ensuring the continuity of its services and infrastructure development.

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The guarantee supports Transnet’s ongoing efforts to modernize its operations and infrastructure. By attracting private sector participation, Transnet aims to enhance efficiency and competitiveness across key freight corridors.

Operational Reforms and Private Sector Engagement

Transnet has made significant progress in implementing rail and port reforms, aligning with the government’s objectives for the logistics sector. The company transported 161 million tons of freight by the end of March 2025, demonstrating resilience amid challenges.

In December 2024, Transnet released the 2024/25 Network Statement, facilitating private sector operators on freight rail. The first successful bidders are expected to be announced by the end of July 2025.

To further encourage investment, the Department of Transport issued a Request for Information in March 2025, inviting private investors to participate in five major freight corridors and associated ports. The RFI closes on 31 May, with requests for proposals anticipated by September.

Transnet is collaborating with the National Treasury and the Presidency to develop a joint funding policy, promoting immediate capital improvements by the private sector in priority freight corridors. Interim solutions include project-based applications to the Budget Facility for Infrastructure.

The financial support package comprises a $2.28 billion guarantee for funding requirements over the 2025/26 and 2026/27 fiscal years, and an additional $555 million guarantee for liquidity management related to debt servicing and capital investments.

This initiative builds upon the $2.61 billion guarantee facility announced in December 2023, which enabled Transnet to execute its Recovery Plan over the 2023/24 – 2024/25 financial years, resulting in increased capital investments and improved liquidity.

A Guarantee Framework Agreement between the Department of Transport and the National Treasury will outline conditions for the guarantee, subject to continuous review and amendment as necessary. Any drawdowns will depend on Transnet meeting these conditions, focusing on operational requirements and logistics sector reforms.

With government support and collaboration with industry partners, Transnet is on course to recover and fulfill its strategic role in South Africa’s economy.

Source, photo: www.sanews.gov.za

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