END OF THE TRACK
Transnet left rudderless as both CEO Portia Derby and CFO Nonkululeko Dlamini resign
The resignation of Transnet group CEO Portia Derby now leaves vacancies at SA’s two critical state-owned entities, Transnet and Eskom, that Public Enterprises Minister Pravin Gordhan is tasked with filling.
Transnet CEO Portia Derby has resigned after three years at the helm of the state-owned transport company.
Daily Maverick understands that Derby handed her resignation letter to the Transnet board on Friday, 29 September, and has committed to staying at the company until the end of October.
In a statement issued on Friday evening, Transnet confirmed Derby’s resignation. Transnet said CFO Nonkululeko Dlamini has also submitted her resignation, leaving the SOE on Friday, 29 September, “after serving a month’s notice”.
This leaves Transnet’s two most senior positions in the C-suite vacant.
Transnet said Michelle Phillips, CEO of Transnet Pipelines, will replace Derby on an acting basis until a permanent replacement is found. Hlengiwe Makhathini will act as CFO in Dlamini’s place.
Derby and Transnet Freight Rail CEO Sizakele Mzimela have faced mounting pressure to resign from various industry bodies and, more recently, organised labour as the company’s financial and operational crisis has worsened under the pair’s watch.
Mzimela, who is in charge of Transnet’s rail network, which is unreliable and causing losses worth billions of rands to the economy, remains in her post.
Derby was appointed by Public Enterprises Minister Pravin Gordhan in 2020 to turn Transnet around, after years of underperformance at the SOE and high-level corruption.
Derby’s resignation now leaves two vacancies at critical SOEs, Transnet and Eskom, that Gorhan is tasked with filling, and has yet to do so.
Speaking about Derby’s resignation, Krutham (formerly Intellidex) MD Peter Attard Montalto told Daily Maverick:
“There will be much relief in many quarters at Portia’s exit from Transnet. However, we must not forget that the problems are very very deep in the organisation, and the board will struggle to find a credible person quickly, who must be exceptionally strong so as not to be captured by the blob layer in the company where the problems really lie.”
In recent months, Derby has come under intense criticism from the mining industry for failing to fix Transnet’s rail network and ports. The Minerals Council South Africa, which represents 80% of the mining industry, has been vocal in calling for Derby and Mzimela to be replaced.
The Transnet board was due to issue a report on the performance of the two executives on Friday after Gordhan directed them to assess their suitability for the posts. The market saw this as Gordhan losing confidence in the leadership of the two.
Transnet’s rail operations are a crucial cog in South Africa’s economy. They are responsible for moving most of the iron ore and coal that is produced in the country and then taken around the world.
But exporters are facing major problems in railing their goods to market, and this can be seen at Transnet Freight Rail (TFR), Transnet’s largest division, which generates most (45%) of the SOE’s revenue of R68.9-billion. Rail volumes at Transnet declined by 13.6% as TFR moved 149.5 million tons (mt) down from 173.1 mt. Volumes have been languishing below 200 mt since 2020. Transnet ports are also ranked among the worst in the world.
Transnet also faces a financial crisis. Transnet swung from a profit of R5-billion to a loss of R5.7-billion for the year ended March 2023. And while the attention has been on Eskom’s debt problems, Transnet has its own. Its debt has reached R130.1-billion, with the SOE now paying R1-billion in interest every month. DM