Transnet Posts Larger Loss Amid Pipeline Litigation Costs
(Reuters) — South African state-owned logistics group Transnet made a larger loss than the previous year of 7.3 billion rand ($408.72 million) in the year to end-March 2024 as it battles litigation over pipeline charges, it reported on Monday.
Debt-laden Transnet has struggled to provide adequate freight rail and port services for years, holding back economic growth in Africa's most industrialized nation. Its reported loss is up from a 5.1 billion rand loss a year earlier.
The logistics firm's struggles have cost mineral exporters billions of rand in earnings due to its constrained capacity to haul commodities to ports.
Transnet said its revenue had increased by more than 11% in the latest financial year because of tariff increases and higher rail and port volumes, but its net operating expenses rose over 19% driven by a provision for ongoing litigation.
The company was ordered by the High Court in June to pay a total of 9.1 billion rand damages to Sasol Ltd. and TotalEnergies after the two firms claimed Transnet had overcharged them for transporting crude oil for several years.
Transnet has appealed against the court order.
Its freight rail division, which accounts for 44% of the group's revenue, registered a marginal improvement in volumes, hauling 151.7 million tons in the financial year, from 149.5 million tons previously.
Transnet wants to stabilize freight rail volumes around 154 million tons, before increasing to 170 million tons under a recovery plan that seeks to restore performance to peak levels around 226 million recorded in 2018, CEO Michelle Phillips said during a results briefing.
"I think that is an imperative for us, so that we can get to the 200, 226, 250 million tons that we require in this country," Phillips said.
While work on fixing locomotive and spares shortages was ongoing with the help of the private sector, Transnet is still struggling to secure its rail network, reporting a 5.4% increase in security-related incidents, mainly cable theft, during the financial year.
Cable theft incidents increased 14%, resulting in the loss of 1,000 kilometers of cable.
($1 = 17.8607 rand)
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