Transnet promises to boost BEE

Transnet is looking to boost localisation and black economic empowerment (BEE) impact in its R300bn infrastructure development trail.

This was expressed by Transnet CEO Brian Molefe during the presentation of the state owned enterprise (SOE) interim financial results yesterday.

Molefe said Transnet was holding discussions with the National Treasury to boost localisation in the acquisition of specialised services from foreign firms. He said Transnet feels that it can do more for localisation than instructed by regulations of the national treasury.

This may please the Black Business Council (BBC) which has complained bitterly that BEE stands to be side lined in the massive capital expenditure undertaken by SOE’s. The BBC has blamed regulations of the national treasury for this and mainly the preferential procurement policy framework act. The BBC has called for repealing of the act and insertion of the broad based black economic empowerment codes of good practice in the adjudication of public tenders.

Molefe said he agreed with the BBC that Transnet can do better for BEE. In its capital expenditure Transnet is acquiring equipment from foreign players but is hoping to facilitate localisation in the manufacture of this equipment. This model can be viewed from last week announced where Transnet contracted a Chinese firm CSR to supply 95 electric locomotives. CSR has a partnered with a BEE partner called Basadi Matsete in this venture. CSR has also committed to localise assembling of the locomotive to the tune of 60.5%.

Transnet financial results for the six months ended September showed the group raising its capital expenditure by more than 30% to a record high of R12.5bn. A significant portion of this capex went into improving rail infrastructure.

Revenue for the period increased by 11% to R24,9 billion from last year’s R22,4 billion  mainly as a result of a 7,5% growth in railed volumes. Profit after tax declined by 24.5% to R1.7bn mainly due to increased debt and costs thereof.

Transnet said in line with the drive for higher volumes, increased input costs associated with the Market Demand Strategy (MDS) as well as other external factors, operating expenses for the period were 13,9% higher at R14,8 billion. The primary contributory factors for this increase related to both material and personnel costs. This included wages – as a result of a rise in the number of employees, as well as increased energy costs.

During the period, Transnet employed an additional 1 752 new people while creating   6 704 new jobs in supplier-related industries, thereby successfully supporting the objectives of government’s New Growth Path.

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