Weak demand has forced state-owned logistics group Transnet to scale back its 2016/2017 capital expenditure plans. Transnet expects to spend R22.8bn in the 2017 financial year, after having already reduced its 2016 investment to R29.6bn, from R33.6bn in 2015.Transnet’s seven-year market demand strategy to rejuvenate SA’s neglected rail network and win market share back from road hauliers looked great on paper when it was announced in April 2012.But as its name implies, the strategy is demand-driven and Transnet’s initial growth projections were too optimistic. Commodity prices have collapsed and the resulting decline in export volumes (particularly for iron ore) have weighed heavily on the rail, port and pipeline utility.At a presentation last month, CEO Siyabonga Gama said Transnet would still spend at least R340bn over the next 10 years, and that it did intend to expand capacity ahead of demand.

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