Transnet has secured a R2.2 billion loan from the French Development Agency (AFD) to part-fund expansion of the Cape Town container terminal.

The agreement was finalised by AFD chief executive Jean-Michel Severino and Transnet acting chief executive Chris Wells at a signing ceremony in Cape Town on Wednesday, the two parties said.

The loan would be rolled out over 15 years, with a three-year capital grace period. Total cost of the terminal expansion would be R4.6-billion, and the project would almost double terminal capacity to 1.4 million, twenty-foot equivalent units a year by 2012.

The work — which has already begun — included deepening the entrance channel and basin, refurbishment of berths, replacement of container handling equipment, and reconfiguration of onshore areas to provide more stack capacity and improved land access.

Wells said the agreement was "a vote of confidence [in] Transnet's sound management of its investment programme".

"It is also a testimony to the attractiveness and bankability of all the projects we are undertaking as part of our five-year capital programme," he said.

What made the agreement particularly attractive was that although in it was in euro, it could be disbursed in rand, a move that would boost Transnet's ability to manage foreign exchange risk.

Wells reiterated Transnet's commitment to its R80-billion investment programme, of which the Cape Town project is part.

"We have reviewed every project in our R80-billion, five-year investment programme in light of the fall in demand caused by the recession.

"We are pleased to say that we will be proceeding with all the major and strategically significant projects in our portfolio."

AFD — in French, Agence Française de Développement — is a development finance institution owned by the French government.

Sapa

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