ANC & EFF MPs tell Transnet Group CEO Portia Derby to shape up

Struggling South African freight rail agency Transnet Group CEO Portia Derby has been told to shape up or ship out by members of parliament.

The African National Congress and Economic Freedom Fighters MPs tore into Transnet Group CEO on Wednesday, accusing her of “doing nothing” to arrest the company’s slide into dysfunction and reprimanding her for privatising parts of its operations, which they said was not government policy. 

The attacks on Derby’s leadership qualities come after that on Eskom CEO André de Ruyter a week ago by the same MPs in the Public Enterprises Portfolio Committee.

This also comes as the ruling party begins to fear the consequences of failing State-owned enterprises at the ballot box in 2024.

Derby, her top executives, and members of the Transnet board appeared in parliament and delivered a detailed presentation to the committee, explaining the difficulties faced by Transnet Freight Rail (TFR) and the large amounts of investment required to restore rail infrastructure, which was not likely to be forthcoming from the government. 

Two weeks ago, Transnet Freight Rail said it would concede the nation’s most crucial freight corridor, from Durban to Johannesburg, to a private sector company for the next 20 years.

BusinessTech Africa understands that the concessionaire must be able to fork out at least R3 billion in the infrastructure and the move is the most significant privatisation in South Africa since Telkom in 1997. 

ANC member of the committee, Judith Tshabalala said:

“The ANC government is ridiculed by the public and voters, who say we have failed. But you run these entities. You are responsible for implementing government policy. The ANC government never told you to privatise anything… I’m not finding much you have done to turn around the situation. Fix up this mess you are creating for the ANC government.”

In her presentation, the underfire Group CEO drew attention to challenges faced by the rail company which included issues with locomotive contracts and the unavailability of spares, crippling theft and vandalism, and “systemic underinvestment” that has decreased reliability and increased derailments and accidents.

Derby said she understood their frustrations but reminded them that the National Rail Policy, which had been approved by Cabinet, opened the way for third-party access to the rail network.

“Total available capacity is 230 megatons a year, and we are not able to move it ourselves. From a South African perspective, and even from a Transnet perspective, it is really important that we are able to move it. So, if other people can enable us to move then it is essential that we bring them on,” she said per Engineering News.

The CEO of TFR Siza Mzimela said the Durban to Joburg freight corridor had been making losses dating back to 2016/17 and parted ways with a significant market share to truckers.

“It is a critical corridor to move freight from road to rail. The reason why we are sitting with a market share below 30% is that the system is very unreliable as a result of continued underinvestment which has eroded our ability to move the maximum capacity. It is the reason why going out to find a partner,” she said. 

“There is no running away [from the fact] that there is a significant amount of investment required. One of the options we looked at was a possibility of a subsidy. But over R9 billion would have been required and at this point in time it was unlikely that support would be forthcoming.”