The African Development Bank (AfDB) has approved a senior loan of up to $400-million to help South Africa's Transnet fund some of the rail programmes included in a five-year, R93,4-billion capital investment programme involving railways, harbours and fuel pipelines.

For 2010/11, the State-owned freight logistics group planned to spend a record R22,8-billion, the bulk of which would be directed towards rail investments.

The AfDB loan, which was approved this week, added to the some R4-billion that Transnet had already secured from other development-finance institutions, as well as export credit agencies over the past few years.

The other key sources of concessional funding included: Agence Française de Développement, Finnvera, Atradius, the Japan Bank for International Cooperation and AFLAC Incorporated.

Transnet had pursued the AfDB loan as part of a larger funding, which would involve it raising some R41,1-billion over the next five years, R35-billion of which would arise from the debt capital markets. A further R73,1-billion would be generated internally.

The group was planning to source around R17,2-billion in 2010/11, including R5,5-billion from an as-yet-untapped Global Medium Term Note Programme, which had been listed in London.

AfDB said that the loan would help fund Transnet Freight Rail's (TFR's) capitalised maintenance plan, which formed part of the utility's overall investment programme. In 2009/10, TFR spent R6,9-billion on rail maintenance.

The bank said that the TFR project was aligned to South Africa's national priorities and the AfDB's own country assistance, regional integration and private sector strategies.

"By improving the South African transportation network, regional trade and integration will be facilitated," the bank said in a statement, adding that it looked forward to Transnet increasing its regional footprint.

Transnet acting CEO Chris Wells reported recently that the group was conducting a due diligence study of opportunities in the rest of Africa. He highlighted, in particular, the potential for partnerships between the port of Luanda, in Angola, and the port of Maputo, in Mozambique.

Transnet was also considering ways to increase volumes on key Southern African Development Community corridors and Wells also mooted the creation of a Southern Africa transhipment hub at the new Ngqura harbour, in the Eastern Cape.