Tag Archive | Brian Molefe

Transnet says freight rail operations coming right

Brian Molefe, CEO of Transnet, went before the portfolio committee on transport regarding the utility’s annual financials and reported that cash generated from operations was up 24% to R18.3bn for 2011/12, being the year under review, and that the Transnet balance sheet recorded a profit of R4.1bn, Transfreight Rail providing around half the revenue.

Mostly importantly he advised (9/10/2012) that in the light of the strong balance sheet, Transnet would be able to borrow for future capital expansion without government guarantees. On the subject of freight improvements he said that coal freight for 2011/12 was up 8.8%, iron ore was up 13.2%, and gross tonnes per kilometre productivity was improved by 1%.

Although maritime container volumes had increased, Molefe said, Pier 2 in Durban had experienced a decline during the current refurbishment period, new cranes having been ordered to improve the position.

Karl Socikwa, Transnet Port Terminals, however, told parliamentarians that productivity issues with Durban container terminal in general was improving and that the “the dwell time of ships were now three to four days.” With the replacement of cranes now being undertaken “Pier 2 was basically a construction site at present”, he said.

In his general report, CEO Molefe said that petroleum volumes decreased by 7.1% because of “industry supply problems” and the Durban – Johannesburg pipeline usage decreased by 8.8%.

On equity issues he said that the Transnet workforce was currently made up of 78.5% blacks and 21.5% whites with 78% being males and 22% being females and that the human resources division would take on sixty engineering trainees, 181 technician trainees and 854 artisan trainees. Training accounted for 3.9% of personnel costs. The total number of employers was 50 992 which pushed up the total employed by 6.6%.

On the subject of reduced revenue experienced by Transnet Pipelines for the period 2011/12, Charl Möller, chief executive, said much of the slowdown in volumes passing through what was known as NMPP was mainly as a result of the slowdown in economic activity; various market changes; improved fuel efficiency and the introduction of Gautrain.

Posted in Energy, Finance, economic, Fuel,oil,renewables, Labour, Public utilities, Trade & Industry, Transport, Uncategorized0 Comments

Transnet doing better but resists carving up its assets

Loans a major feature of Transnet balance sheet………

Brian Molefe, CEO of Transnet, on speaking to the  portfolio committee on public enterprises, noted that already South Africa’s freight volumes were threatened by the euro-crisis and Transnet could not absorb this and any other threats, such as reducing its asset base “ if it was to continue without re-negotiating with its lenders.”

Anoj Singh, acting chief financial officer, Transnet, earlier this month, told the portfolio committeethat the rail containers portion of its business was of “ significant focus” and volumes increased by 13.2%, and market share increased to 34%, representing a significant shift from road to rail.

Its general freight business grew by 2.2%, despite a loss of volumes due to industrial action, cable theft and rolling stock related faults. Overall productivity and service were of concern, Singh noted, and delivery turnarounds had deteriorated from the prior year, but measures have been promised and now put in place to turn that around.   Domestic coal volumes grew by 12.4% despite operational challenges and a key focus area for the next five years was to meet Eskom’s domestic coal requirements. Magnetite volumes increased by 3.7 and export manganese volumes increased by 23.1% compared to the prior year.

CEO, Brian Molefe, said that export coal volumes (62mt) reflected marginal growth, but overall productivity and service delivery deteriorated from the prior year, mainly due to the impact of industrial action as well as rail infrastructure problems and operational challenges.

Export iron ore volumes (46.2mt) increased by 3.4% despite an unprecedented number of derailments that resulted in lost volumes and impacted on operational performance levels. Ship loading rates increased at 9.7%, due to the successful implementation of dual and staggered ship loading process installed at the Transnet iron ore terminal .

Concerns were raised by parliamentarians regarding on-time departures and arrivals of freight and their impact on productivity and efficiency, noting that the number of delays had risen according to figures presented.   Mr Molefe responded that the general freight business, by and large, had improved dramatically over the past year. There was a 7.5% increase in containers on rail last year and, for the first time in the history of Transnet, more than 200 million tons of commodities were transported by rail. Over the next seven years, R200 billion of the R300 billion that Transnet was spending on capex would be going into rail.

There was a 1.5% increase in petroleum volumes from the prior year, despite the constraints presented by the existing Durban-Johannesburg pipeline and Transnet spent R21.5 billion on capital investment, with the biggest portion in the rail and pipeline sectors. 94% of the planned spending was achieved.   MPs asked what the future plans were for the Port of Ngqura, and how the Eastern Cape would benefit from that. Molefe responded that there had been a decision to establish a manganese terminal at the Port of Ngqura, with a budget of R300 million.

This would be developed as the transhipment hub. Manganese was currently exported through Port Elizabeth, but would be moved to Ngqura. Cranes and equipment were bought, and paving was finished. Transnet had recently negotiated more transhipment traffic for the Port of Ngqura from Europe.

Brian Molefe said that in order to foil piracy off Somalia, some of the larger world sea vessels, consuming a great deal more fuel to do so, were travelling at high speeds using a Mediterranean Sea to South Africa route direct and reaching the safety of South African waters with its defence frigates and aircraft, to the benefit of SA port facilities.

MPs asked the reason for the decrease in revenue in the pipeline division in 2010/1, which was some 2%.  Molefe responded saying this was largely because of industry issues and that Transnet had received less revenue than projected but that the “pipeline was ready, commissioned and functioning very well” and the situation would soon reverse.

In a subsequent meeting with parliamentarians of the portfolio committee on economic affairs, CEO Brain Molefe warned that changing Transnet’s asset base by selling of assets would change its gearing and thus its ability to finance its expansion plans.

He referred again to the restructuring of the general freight business which depending upon its ability to borrow funds and said that any plans to break up Transnet so that it became an operator competing with the private sector on certain sections of line were to be rejected, he said.

Molefe noted that already South Africa’s freight volumes were threatened by the euro-crisis and Transnet could not absorb this and any other threats, such as reducing its asset base “if it was to continue without re-negotiating with its lenders.”   The general freight business of Transnet, which depended upon its ability to borrow funds, said Molefe, was at a critical stage that any plans to break up Transnet so that it became an operator competing with the private sector on certain sections of line were to be rejected.

 

Posted in Electricity, Finance, economic, Labour, Public utilities, Trade & Industry, Transport0 Comments

New fuel pipeline will come at a cost

Brian Molefe, CEO of Transnet, told his audience at opening of the 550 kilometre multi-product fuel pipeline between Durban and Johannesburg that the cost of the new installation “will have to be recovered”.

In his opinion, the new pipeline “was one of the most cutting-edge and innovative infrastructure investments in the world”, the cost involved being given at R23.4bn at this stage, he said. It is understood that Transnet has applied to NERSA for a further 22% increase in tariff charges for the coming year, according to reports.

Last year’s tariff increase for fuel pumped is understood to have been just short of 60%. January 2012 has seen the new installation working alongside the older pipeline but the new line is only configured for diesel at this stage, with limited pumping facilities along its length.

Coming on top of a recent 43c per litre fuel price increase and the minister’s November call for “an audit” into refinery shortages, both fuel and electricity supply problems would seem to be moving in the same dismal direction leaving government and suppliers further apart.

On an up-beat note, Molefe told his audience that “the state-of-the-art pipeline” would also transport 93 and 95 octane petrol, low sulphur and ultralow sulphur diesel and jet fuel at a rate of “about three-million litres an hour”.  He said that eventually the capacity of the line was expected to be in the region of 26.7-billion litres of fuel a year.

Transnet pipelines head Charl Möller said the new pipeline would be upgraded in five phases up to 2032 as more pumping stations and metering points were added.

Posted in Cabinet,Presidential, Energy, Finance, economic, Fuel,oil,renewables, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments


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