Transnet Ink Near-Billion Loan


South African State-owned freight transport and logistics company Transnet has signed a more than US$850 million club loan with five major financial institutions, in a bid to fund its locomotive fleet acquisition programme.

The acquisition is the single-biggest item of Transnet’s record-breaking infrastructure investment programme – the ‘Market Demand Strategy’.

The club loan is in addition to the $1.5 billion loan facility agreed with China Development Bank (CDB) in June, 2015. The company has an option to increase the CDB facility to $2.5 billion as part of an MOU between China and South Africa.

All the funders agreed a term of 15 years at competitive rates, including a grace period of four and a half years, while the locomotives are under construction.

Watch a world-exclusive video interview with Karl Socikwa, CEO of Transnet

This is in keeping with the company’s approved funding strategy aimed at achieving a desired match between long-term debt and assets.

Transnet has so far spent more than $7.7 billion in its rail, ports and pipelines infrastructure since it launched the MDS in 2012. This will increase to almost $8.9 billion by the end of the 2015/2016 financial year. 

Transnet has also committed to further investments of between more than $24 billion and $27 billion over the next 10 years, possibly taking investment to a record $35.5 billion.

In March 2014, Transnet awarded a contract for the building of 1,064 diesel and electric locomotives to four global original equipment manufacturers.

Read a Technical Paper on Transnet’s Intelliport concept

The company awarded CSR Zhuzhou Electric Locomotive and Bombardier Transportation contracts to build 599 electric locomotives and; General Electric Technologies and CNR Rolling Stock to build 465 diesel locomotives.

The acquisition of the 1064 locomotives is central to Transnet’s capital investment programme, the Market Demand Strategy, which is aimed at increasing volumes while reducing the average age of the company’s locomotive fleet.

The logistics giant recently announced that it will be developing a total of seven ports in the next five years at a number of locations in South Africa.

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