Cabinet has backed the separation of the Transnet National Ports Authority (TNPA) from Transnet in a step towards establishing the ports authority as a stand-alone company owned directly by the state.
In a statement on its September 23 meeting, Cabinet also approved an investigation by TNPA into the feasibility of bringing in a minority equity partner from one of South Africa’s development finance institutions (DFIs).
The decision is part of broader transport and logistics reforms intended to improve the operational performance, infrastructure reliability and competitiveness of South Africa’s freight system, according to the Cabinet statement.
The statement sets out several principles to guide the separation. These include fair compensation for Transnet based on an independently assessed valuation of TNPA, long-term financial sustainability and the equitable allocation of liabilities between the ports authority and the wider Transnet group.
Cabinet also specified the protection of employees and customers, the preservation of strategic state ownership and control of national ports infrastructure and improved investment capability and infrastructure development.
The development follows Transport Minister Barbara Creecy’s recent remarks to Parliament when she said the department is working towards securing a Cabinet decision on TNPA’s separation from Transnet. At the time, she indicated that the department wanted to begin implementing the decision before year-end.
Creecy said TNPA currently generates revenue used by the wider Transnet group. She argued that separation could allow more of this revenue to be reinvested in the port system to improve infrastructure.
She cautioned, however, that a Cabinet decision would not mean the restructuring is complete. Further work is required before a new structure could take effect.
The latest Cabinet statement does not provide a timeframe for the separation to take effect or identify a potential DFI partner.
TNPA’s separation has been under discussion for years. In 2021, government announced plans to establish the authority as an independent, wholly owned subsidiary of Transnet. The latest decision envisages TNPA operating outside the Transnet group under direct state ownership.
Freight News approached Transnet and the Department of Transport for clarity on the implications of the Cabinet decision and the next steps. The department referred the enquiry to Transnet, which indicated that it will respond in due course.