Cabinet has approved the separation of the Transnet National Ports Authority (TNPA) from the Transnet Group, paving the way for the ports regulator and operator to function as an independent state-owned company.

The decision forms part of broader transport and logistics “reforms” nominally aimed at improving the reliability, efficiency, and competitiveness of South Africa’s freight system.

Under the approved model, the TNPA will be directly owned by the state rather than operating as part of Transnet. Cabinet has also approved that the TNPA investigate the possibility of bringing in a minority equity partner from one of South Africa’s development finance institutions.

The separation will be guided by several principles, including ensuring Transnet receives fair compensation based on an independently assessed valuation of the TNPA. The restructuring will also require an equitable allocation of liabilities between the Transnet Group and the new standalone ports authority.

Cabinet said the process must protect employees and customers, preserve strategic state ownership and control of national ports infrastructure, and strengthen the TNPA’s ability to attract investment and expand infrastructure.

The moves come as South Africa’s ports and freight rail network face long-standing operational challenges that have constrained exports, increased logistics costs and reduced the competitiveness of local industries. The government has previously identified improving port efficiency and expanding private sector participation in logistics infrastructure as key elements of its freight reform programme.

But critics say the move is largely cosmetic and fails to address the core reasons why state-owned logistics infrastructure is failing which include cadre deployment, a lack of merit in appointments, preferential procurement obligations, and failing to run state-owned enterprises according to basic commercial principles.