Transnet Recovery Plan
The Transnet Chairperson, while reflecting on the board’s first 100 days, noted the following in relation to Transnet’s recovery plan:
The Board convened a Workshop session from 3 – 5 October 2023 to work through detailed proposals developed across all the Operating Divisions.
The outcome of this process, developed for the next 6, 12, and 18 months, will be presented as the final proposal from the Board.
This plan is essential for regaining lost capacity across all of Transnet’s operations, including rail and ports, and represents a formal commitment to work through the structures of the NLCC to deliver the plan.
Process and Principles
As part of this process, the Board elicited views from an independent technical group to stress-test proposals from the Operating Divisions and improve the quality of the final proposals. The Plan has also been presented to the Ministers of Public Enterprises and Finance, and discussions are ongoing. The plan will be guided by several principles, including:
- Improved utilisation and care for operational assets and infrastructure
- Improved integration and operation execution across operating divisions
- Improved employee engagement and management
- Development of a deeper accountability framework
Objectives and Focus Areas
The primary focus of the Transnet Recovery Plan is the development of tactical initiatives to drive volume recovery and enhance rail and port operations. The plan aims to:
Improve the availability and reliability of critical equipment
Enhance the quality of assets
This is crucial given the existing constraints related to the current quality and availability of moving assets, such as rolling stock, port, and marine equipment, as well as fixed infrastructure assets.
Key Elements and Financial Sustainability
A key element of the plan is improved maintenance planning and adherence to plans to resolve operational ‘bottlenecks’ and equipment shortages. To safeguard Transnet’s financial sustainability, effective management of capital allocation and focus on funding essential areas, like infrastructure renewal and proactive debt collection, are critical.
Transnet will also continue to engage the private sector to improve operational and investment capabilities. This includes focusing on the disposal of non-core assets and using private sector partnerships (PSPs) to drive growth in key market segments.
Organisational Changes and Rail Reform
Transnet Freight Rail will be separated vertically into two divisions: Transnet Freight Rail Operating Company (TFROC) and Transnet Rail Infrastructure Manager (TRIM). TRIM will focus on protecting and restoring rail network capacity for commercially viable high-volume traffic to assist TFROC.
The rail reform programme remains on track and is a critical part of the Plan. TRIM is in place, and separation will be complete by the end of October 2023. Third-party access will be opened by April 2024.
Transnet Engineering and Procurement
Transnet Engineering has clear targets to bring back rolling stock and ensure effective maintenance. The procurement function is reviewing National Treasury Instruction Notes to enhance agility while maintaining control.
Accountability and Controls
Stringent accountability oversight is in place. Transnet is participating in the NLCC to enhance operational effectiveness and maintain safety. Workstreams and subcommittees have been developed for specific performance metrics. The internal audit function will conduct additional reviews quarterly, supported by monthly reporting.
Financial Position
Transnet’s financial position has deteriorated over the last five years, with a decline in revenue and an increase in operating expenses. Various initiatives have been developed to improve revenue generation and manage costs.
Employee Engagement
Regular engagements with organised labour are essential for a stable operating environment. An employee survey will be conducted, and its results will inform further initiatives for improving employee engagement and well-being.
Anti-Corruption Measures
Transnet is focused on detecting, preventing, and investigating fraud and corruption. Vetting and lifestyle audits are conducted, and an anti-corruption leg has been established within the NLCC to prioritise significant matters.
Governance and Legal
Efforts are underway to fill executive positions and provide updates on governance. Lenders are being consulted regarding compliance with IFRS and loan covenants.
Conclusion
The Recovery Plan provides an opportunity to turn around not just the business but also its reputation. The next few months are critical, and both Management and the Board are giving this priority attention. They will continue to work with employees, organised labour, the Government, and other key stakeholders to stabilise Transnet and position it for growth.
View the plan here: https://www.transnet.net/Media/Press%20Release%20Office/Transnet%20Recovery%20Plan.pdf