South African logistics group Transnet plans to initially raise $500 million (R3.9 billion) for expansion projects through bonds it will issue in the US and Europe, acting CEO Chris Wells said on Wednesday.
Wells said the funds would be used to upgrade iron ore and coal railway lines and to build a new pipeline between Durban and Johannesburg, due in 2011.
"The first issuance, when we do issue bonds is likely to be around $500 million," Wells told Reuters in an interview.
Wells said the programme would be registered this year, but market conditions would determine the timing of the issue.
He said the state-owned firm was also in talks with a number of development funding institutions in Africa and Europe for possible financing of some of its projects, including expansion of its port capacity and purchase of new locomotives.
Wells said Transnet also plans to invest in construction of a rail line to the Waterberg coal reserves in South Africa's Mpumalanga province.
The Waterberg is expected to become a major source for coal after reserves in the Witbank area now being used by power plants are depleted, and also to supply coal for exports.
"Those are really significant deposits of coal. The majority of it is probably suitable for coal-fired (plants), but it is estimated that 20 to 30 percent will be export quality. It's going to need railings to open up the development of that area," Wells said.
Transnet's freight arm, Trasnet Freight Rail (TFR), has faced wide criticism for neglecting the rail infrastructure, but the company says the recent investments, five-times what was put into the sector every year before, will pay off.
Transnet is expanding the annual capacity on the iron ore railway lines to 60 million tonnes from 47 millions tonnes and said it would raise the capacity of the coal lines to 81 million from 72 million now by June next year.
Wells said the company would also seek to engage the private sector to finance some of the projects.
"The (private sector participation) that we are looking at will be for specialist equipment which is used by one customer, restricted to their use," Wells said, but gave no details.
Wells said Transnet was in discussions with the police and government authorities in a bid to tighten laws against vandalism of cables, which has cost the company huge amounts in replacement and repair works.
Transnet said its R80 billion investment programme was on track and the company has managed to raise 90 percent or R13 billion of the funding required for this year.
"But going forward that programme is likely to grow and so we would think that in our next planning cycle for the next five years, we will be at least 10 percent higher than the 80 billion rand," he said.
The National Treasury said on Tuesday public infrastructure expenditure will rise to R872 billion over the next 3 years, with about half of that spent by state-owned enterprises Eskom, Transnet and the National Roads Agency. - Reuters