Bank deal to boost investment programme for South Africa’s Transnet

South Africa’s government news agency said on 11 May that the DBSA “will also share in project preparation funding, contribute financial and project management skills and capacity... and provide strategic support for the execution of Transnet’s PSP programme”.

Transnet’s acting group chief executive officer Siyabonga Gama said: “Finding innovative funding solutions is a key element of the market demand strategy. Partnerships with the private sector will not only broaden our sources of funding for capital investments, they will give us access to private sector skills and expertise.”

Gama said the DBSA will also help Transnet manage risk and “provide alternative procurement tools for large infrastructure projects”.

“Both DBSA and Transnet, as state-owned entities, should be immensely proud that we are able to work together in an innovative manner to unlock hundreds of billions of rand in value for the South African economy," Gama said.

DBSA chief executive officer Patrick Dlamini said increasing PSP in South Africa’s infrastructure investment programme is part of the bank’s mandate as a development finance institution. In addition, once a project is ready to go to market, the DBSA is eligible to compete as one of the funders.

“This partnership speaks to one of our core objectives of supporting economic growth through investing in economic infrastructure – with transportation being one of the four key focus sectors to achieve this objective,” Dlamini said. 

Transnet’s freight demand forecast (28-page / 1.23 MB PDF), published in 2014, projected that demand for freight transportation is expected to grow from 762 to 1,954 million tonnes per annum over the next 20 years. Transnet said this represented an increase in volume of around 150%. By 2043, manufactured freight will represent more than 64% of all goods transported while mining freight is expected to be about 26%.

Separately, the DBSA-managed Southern African Development Community’s Project Preparation and Development Facility (PPDF) has approved its first allocation of preparation funding. Around $3.5 million is being given to the Southern African Power Pool (SAPP) towards development of the ‘regional interconnector transmission line project’ linking Mozambique, Zimbabwe and South Africa.

The PPDF is funded by the EU and the German government’s KfW banking group. The KfW contribution will fund the interconnector project, which will develop, build and operate a 400 kilovolt or 500 kV high-voltage transmission infrastructure over a distance of about 935 kilometres. The project includes transmission lines and associated sub-stations throughout the three countries, aimed at strengthening the existing ‘North South transmission interconnection corridor’ in Southern Africa.

The project is sponsored by the member countries’ national power utilities, who are represented by the SAPP.