Transnet, South Africa’s rail and portal parastatal is reported to have recorded a significant rise in revenue after it was engaged by Botswana Railways to deliver 30 passengers coaches. The upward movement has been attributed to cross border activities including the Botswana Railways tender.
Following the launch of the BR Express passenger train on Tuesday, Transnet spokesperson Mboniso Sigonyela admitted that regional integration of the freight system and the diversification of sources of revenue has been a key focus area for Transnet in recent years. Transnet is fully owned by the South African government but operates as a corporate entity aimed at both supporting and contributing to the neighbouring country’s freight logistics network.
On Tuesday, Botswana received 22 passenger coaches from Transnet, as part of its plan to reintroduce a passenger rail service. A further 15 coaches will be delivered to Botswana by May of this year. As a result, the company’s financials show that its revenue from cross-border activities has increased from R1.5 billion in 2014 to R2.6 billion in 2015. The South African company said Tuesday that it continues to seek markets and customers elsewhere in Africa, where there is growing demand for railroad equipment and services.
“Regional integration of the freight system and diversification of sources of revenue has been a key focus area for Transnet in recent years,” Transnet’s Sigonyela said on Tuesday.
Transnet won the BR Express contract following a competitive bidding process that ended mid last year. The contract between the two companies was reportedly signed on September 11 with the first batch expected by March this year. The old passenger train, dubbed Blue Train was halted in 2009 after incurring huge losses that rendered Botswana Railways unable to service and maintain locomotives, thereby compromising passenger safety. The launch of the new BR Express was mired in controversy on Wednesday night following power failures that resulted in the train failing to depart from Francistown station for Lobatse. The passenger coaches were transported to Gaborone on rail from the Transnet facility in Koedoespoort, east of Pretoria last week. Addressing enraged passengers at the train station in Francistown on Wednesday night, Botswana Railways CEO Dominick Ntwaagae explained that the halt was caused by loss of power.
Meanwhile Moody’s Investors Service recently placed all the ratings assigned to Transnet SOC Ltd. (“Transnet”) under review for downgrade. The recent rating actions were prompted by the weakening of South Africa’s credit profile as captured by Moody’s recent decision to put South Africa’s Baa2 government bond rating on review for downgrade.