Johannesburg, 25 July 2002
Transnet remains the primary transport logistics company in the country. As such its financial health and general well-being is critical to the immediate and long term success of the South African economy, its integration with the SADC region and the bedrock of our trade, industrial and tourism relations with the rest of the world.
Transnet management know only too well the pressures that they operate under. As well as the keen interest in their activities displayed by the public. This is because nearly everything they do has a practical and real impact on the daily lives of millions of people.
The responsibility to do well, therefore, is a heavy one. But at the same time it should be one that brings immense satisfaction and pride when the job is well done.
Once again, and for the umpteenth year, Transnet has posted a confident and worthy set of financial results. Government, therefore, congratulates Transnet in its entirety from workers and engineers, to support staff and management echelons, for the hard work they have put in to produce these generally impressive results.
Another trend that remains evident in these results is the underperformance of some divisions and work units of Transnet, and the manner in which that is outweighed by better performance in other, critical areas. My appeal as shareholder to management is to focus greater attention in the coming year on the troublespots in a manner that places Transnet as a whole on the turnaround path. Management has already identified the problems and is addressing these and we look forward to their success in this regard.
Overall, however, Transnet's performance has shown the correctness of decisions taken in previous years, not only during 2001/2002, to address the massive pension problems, the debt albatross, and to put corporate governance on a much sounder footing than before. These three areas are critical to Transnet's wellbeing and we must ensure that we guard the advances we have made jealously.
It is interesting to note how the United States has been shaken from its corporate complacency in recent months so that today, much greater attention is focussed on issues of corporate governance, accounting practices and consultancy, and the application of sound accounting principles that emphasise transparency, honesty, and sound business practice. I am pleased to note that the requirements of the PFMA are being implemented in Transnet and the positive results of such a control regime are evident for all to see. Second, it is also pleasing to note that we in South Africa generally have been aware of corporate governance issues for a longer period than some, and so our major companies and corporations are in a position to avoid some of the pitfalls that have hit others. May we continue along this path uninterrupted.
Transnet's results provide a sound foundation from which the company can address a number of important challenges as we move through the 2002/03 financial year. Let me outline briefly what these are and what our expectations as government are.
We have already noted that in some ways, the immediate future can be categorised as the 'period of infrastructure renewal and extension.' Spoornet has embarked on an ambitious programme to improve electrical infrastructure, rolling stock, locomotive, signals, stations and general improvement to strategic network development. The time has now come to address the infrastructure backlog, estimated by some in the region of R16billion accummulated over 20 odd years. This will take some time but the first major steps have been taken and these must be pursued with vigour, involving partnerships between government, Transnet and Spoornet and the private sector.
The ongoing transformation of Portnet into the Ports Authority and Port Operations continues apace, with legislative and regulatory certainty due in the coming year. Our ports are a major hub of activity, both for export and import, and we cannot sustain the current backlogs, inefficiencies and delays that continue to mark much of their activity. Neither can we simply 'build' our way out of the problems ; we have to pursue the implementation of national ports policy with care and consultation, but with necessary commitment to ensuring long term success. The Durban Port is a major priority in this regard.
One critical area of concern from Government's perspective is the commitment of sufficient resources from the public and private sectors that will be necessary to align our port operations and our customs regime with the stringent but worthwhile requirements of the United States' initiated Container Security Initiative. That programme will require significant and specific infrastructure spend in future as well as a change in the manner in which we do business through our ports.
The development of Coega and the extension of facilities at East London Harbour are also critical areas of focus for this current financial year and we do not expect any delays in the implementation of these important projects in the Eastern Cape.
The engineering capacity of Transnet as a whole, including units such as Transwerk, have a lot of work to do this coming year, and we still need to monitor closely the work we are doing to open up opportunities to the youth who are entering the labour market. The firm foundations of training and skills development, including bursary and scholarship and artisan apprentice support must be built upon.
Transnet continues to play an important role as a partner of choice for many operations in Africa. Not only through the obvious activity of SAA, Transnet, mainly through Spoornet, extends its activities into countries as far afield as Sudan and as close to home as Mocambique. This is work that is central to Nepad and which must continue apace.
Lest we become complacent about solid financial results, let us not forget that the fundamental reason for restructuring Transnet is to reduce the costs of doing business in South Africa and to ensure that our citizens benefit from affordable services. We therefore need to secure a balance between shareholder returns and appropriate pricing of services. In this equation, increasing revenue streams is not the be all and end all : we actually need to see reductions in prices to consumers. Transnet must operate to promote micro-economic efficiency within the parameters of inflation targetting.
In conclusion, let me reiterate the confidence that Government has in the management and staff of Transnet. We are aware that the challenges you face are great ; but we are also confident that we will build on the sound relations between labour and governent and transnet itself to mvoe forward with confidence.
I thank you.