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JOHANNESBURG, July 14 (Reuters) - South Africa’s state-owned logistics firm Transnet expects its capital expansion plan will now cost 336.6 billion rand ($27.07 billion), up from 312.2 billion a year ago, the company said on Tuesday.
Transnet is four years into a seven year plan to expand railways, pipelines and ports in Africa’s most advanced economy where growth is hovering around 2 percent.
The state-owned firm still has room to borrow more and increase spending to boost economic growth, according to acting chief executive Siyabonga Gama.
The firm has lowered its gearing to 40 percent from 45.9 percent a year ago, said Gama, adding it wanted to stay below a self-imposed limit of 50 percent as it invests to expand capacity.
The 24 billion rand increase is partly due to higher costs as the rand loses value against major currencies, CFO Anoj Singh told Reuters.
Whereas the company was spending almost nothing on expansion before the seven-year plan, Transnet now channels about 45 percent of the investment into maintaining its existing assets and the rest to increase its capacity, said Singh.
Transnet’s revenue increased 8 percent to 61.2 billion rand despite sluggish economic growth. Earnings before interest, tax, depreciation and amortization grew 8.2 percent to 25.6 billion rand. ($1 = 12.4360 rand) (Reporting by TJ Strydom; Editing by Keith Weir)