CAPE TOWN: State-owned logistics firm Transnet expects its capital expansion plan will now cost R336.6bn, up from R312.2bn a year ago, the company said on Tuesday.
Transnet is four years into a seven-year plan to expand railways, pipelines and ports in Africa’s most advanced economy where growth is hovering around 2%. The state-owned firm still has room to borrow more and increase spending to boost economic growth, according to acting chief executive Siyabonga Gama.
The firm has lowered its gearing to 40% from 45.9% a year ago, said Mr Gama, adding it wanted to stay below a self-imposed limit of 50% as it invests to expand capacity. The R24bn increase is partly due to higher costs as the rand loses value against major currencies, CFO Anoj Singh told Reuters. Whereas the company was spending almost nothing on expansion before the seven-year plan, Transnet now channels about 45% of the investment into maintaining its existing assets and the rest to increase its capacity, said Mr Singh.
Transnet’s revenue increased 8% to R61.2bn despite sluggish economic growth. Earnings before interest, tax, depreciation and amortisation grew 8.2% to R25.6bn.
