IN MAY last year the South African government appointed Dolly Mokgatle as Chief Executive of Spoornet. The 20070 km network she found was not in good shape, and in November she decided how she would start to turn the business round.
Spoornet had moved into the red in 1998-99 with a net loss of R135m against a profit of R573m the previous year. Some improvement was evident in 2000-01, but by this time plans for fundamental change were on the table (RG 4.01 p205). Halcrow Rail was assigned in 2000 to reorganise the railway’s key divisions, while N M Rothschild, together with the Kagiso Group, was appointed to advise on external restructuring. Rothschild’s recommendations included much leaner staffing, but the prospect of substantial job losses aroused predictable outrage from the trade unions. Nor was the recommendation to hive off the successful and profitable Orex and Coalink heavy haul lines well received.
More recently, performance has deteriorated again, with customer complaints spiralling, infrastructure deteriorating and staff morale causing concern. In a clear indication of her future strategy, Mokgatle has now ruled that privatisation is off. Instead, all Spoornet divisions are to be reintegrated into a single operational structure, including the two heavy haul lines. The new structure will be headed by Ravi Nair, who conceded that ’it is a challenge’, telling Engineering News that ’it is a bit like putting a few smart children in a class with others who are not as bright and expecting the performance of the entire class to rise.’
It is no small irony that Spoornet is actively participating in the privatisation of railways elsewhere in Africa. Wherever concessions are offered, it heads the queue of would-be bidders. Claiming that it provides and maintains 80% of Africa’s rail infrastructure, Spoornet’s advertising emphasises its involvement all over the continent, ’earning billions in much-needed foreign exchange’.
Meanwhile, all is not well at Transnet, Spoornet’s parent body that oversees all South Africa’s transport. Chief Executive Mafika Mkwanazi had reported in August having ’the best results ever’, with revenue up 15% to R41bn and operating profits increased more than threefold to R5bn. But barely a month later the government announced that it was appointing Maria Ramos, the country’s Director-General of Finance, to replace Mkwanazi. In November, Ramos, not yet officially in the job, found Transnet ’overburdened’ with debt of nearly R33bn. Unless its solvency could be improved drastically, she told parliament, the planned R45bn infrastructure investment programme was in jeopardy. She foresaw a ’radical cost-cutting exercise’, as well as selling off unprofitable parts of the business.