South Africa's National Treasury is evaluating the possibility of providing a cash injection to address the challenges faced by the state-owned rail and port company, Transnet SOC Ltd, said the minister of finance Enoch Godongwana.

Derailments, equipment shortages, vandalism, corruption and adverse weather conditions have severely impacted Transnet's operations. As a result, companies have been compelled to reduce costs by cutting jobs, leading to mounted commodities at warehouses and ports.

Last month, the finance ministry agreed to provide 47 billion rand ($2.5 billion) to the company, with approximately half of the funds allocated to meet immediate debt obligations.

Godongwana said the financial analysis is still underway to decide whether to inject further funds into Transnet hinging on the requirements for fixing the company's current debt burden of 130 billion rand and alleviating its logistical constraints.

Transnet's rail network inefficiencies have caused a steep decline in coal deliveries from mines to the country's major export ports, reaching the lowest level in the past three decades. Meanwhile, ports have experienced congestion amid vessel accumulation, partly due to equipment damage from extreme weather events.

A well-functioning logistics system is vital for the country's economy, the finance minister said.

(Writing by Riley Liang  Editing by Emma Yang)
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