National Treasury calls on Transnet and Eskom to get their act together

National Treasury wants Transnet and Eskom to get their act together. Picture: Supplied

National Treasury wants Transnet and Eskom to get their act together. Picture: Supplied

Published Nov 10, 2023


National Treasury Director-General Duncan Pieterse has reiterated that the poor performance of Transnet and Eskom has had an impact on the economy, leading to low growth.

Transnet cost the economy R411 billion last year.

Electricity Minister Kgosientsho Ramokgopa said recently that Stage 6 of load shedding was costing the country R1 billion a day.

Eskom has been implementing various stages of load shedding since last year, and this year it set aside R30 billion to burn on diesel.

Ramokgopa said they need almost R400bn to expand transmission lines in the country.

Pieterse and senior Treasury officials on Friday told the joint committees on finance in Parliament that if network industries jacked up their performance, this would lead to economic growth.

But poor performance by Transnet and Eskom led to low growth this year.

Pieterse said they need to get things right to ensure growth.

“The main challenge that underpins the unsustainability of our debt position is our very low growth. In the Medium-Term Budget Policy Statement, we acknowledge the role that the energy and logistics sectors, and Eskom and Transnet in particular, have played in these very poor growth outcomes. It’s our view that in an environment where the economy is constrained by these supply-side or structural constraints, increasing spending significantly in that kind of environment will not permanently raise economic growth,” said Pieterse.

Deputy Director-General Edgar Sishi said he agreed with Pieterse that the poor performance of key State-owned entities, Eskom and Transnet, contributed to the lack of growth.

“We note various comments about how we think about the growth challenges in the country. As the director-general indicated, the core problem is growth. We agree with this, and the MTBPS says this. Growth is related to falling electricity supply and logistics challenges,” said Sishi.

He said what would need to happen to revive growth was to implement reforms and remove constraints experienced in these SOEs.

The reforms were critical for economic growth and economic stability.

They would have to ensure that the reforms were implemented urgently.

“The agenda has been designed to unlock growth by removing constraints. This includes reforms in the energy sector and the recognition of the fact that rail inefficiencies, in other words, freight rail, which are the challenges the director-general mentioned, are costing the economy dearly and they need to be addressed. The total cost of rail inefficiencies is estimated at R411 billion, which has both direct and indirect impacts on tax revenue,” said Sishi.

He said efforts to fix the rail sector were under way.

Cosatu and its affiliate, the National Union of Mineworkers, have said 35,000 workers in the mines are set to lose their jobs because coal was no longer transported by rail but by trucks on the road.

Public Enterprises Minister Pravin Gordhan told Parliament a few weeks ago that volumes by Transnet declined from 226 million tons to 149 million tons.

But government has produced a roadmap that will increase volumes and stabilise the sector.

Sishi said they wanted to get the rail network fixed.

“Efforts to fix rail are under way, including modernisation and competition within the rail sector. The reform agenda seeks to build the capacity of implementing agents, make appropriate regulatory changes, and restructure sectors to support economic growth,” said Sishi.

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