All you need to know about Michelle Phillips, Transnet's eighth CEO ...

Public Enterprises Minister Pravin Gordhan has confirmed the appointment of Transnet veteran and insider Michelle Phillips as the permanent CEO of the state-owned freight rail and ports operator. 

She becomes Transnet’s eighth CEO in 23 years — a count that includes individuals who were acting CEOs.

Phillips, who has been with Transnet since 2001 and served in various roles over the past 22 years at the state-owned enterprise’s (SOE’s) port and pipeline operations, has been in an acting group CEO position since October. 

She was at the helm of Transnet on an acting basis following the resignation of Portia Derby and other high-profile executives in September.

She brings technical expertise and institutional memory to the Transnet top job. Over the past two decades, she has managed the SOE’s port terminals (mainly at Durban) and most recently served as the CEO of Transnet Pipelines, which moves petrol, diesel and gas across South Africa. 

The appointment of Phillips as the group CEO of Transnet is a step change as most of her recent predecessors (those permanently appointed) — including Derby, Maria Ramos and Brian Molefe — were external candidates. This time, she joins Siyabonga Gama (another predecessor) in being picked as an insider for the prominent job at Transnet.

Gordhan’s pick of Phillips was no surprise because she was a frontrunner in the five-month search for a CEO and the Transnet board eventually recommended her for the top job.

Read more in Daily Maverick: Acting Transnet boss Phillips emerges as frontrunner after board lists preferred CEO candidates

Other candidates who were considered by the board included Russell Baatjies, the acting CEO of Transnet Freight Rail; Nosipho Damasane, the executive chair of Richards Bay Coal Terminal; former Transnet CFO Mohammed Mahomedy; and former Transnet group chief operations officer Mlamuli Buthelezi.  

Gordhan said, “Ms Phillips is well regarded by the market as a problem solver with good networks. She has a track record of being a team player and collaborator to achieve business objectives. Michelle has over 20 years of experience in Transnet in various roles and she knows what it takes to turn the business around.”

An advocate, Phillips started her career at the Special Investigating Unit as a forensic investigator. She joined Transnet in 2001 as a manager at Transnet National Ports Authority, which is responsible for improving the infrastructure of ports across South Africa.

In subsequent years, Phillips was appointed to managerial positions at Transnet Port Terminals and at the Durban container terminal, where she was a general manager of customer growth and freight solutions at Transnet in 2017, according to her LinkedIn profile. 

In 2020, she became CEO of Transnet Pipelines. 

Gordhan said when Phillips became CEO, Transnet Pipelines was affected by “poor governance, theft, spillage and poor performance”, a situation which Phillips turned around.

At Transnet Pipelines, Phillips “achieved, for the first time, a green audit report status on supply chain, which means the business is clean and without deviations from governance”. Gordhan said she saved the business R1.5-billion over 18 months.

Phillips has her work cut out in leading all of Transnet’s operations. She will lead an SOE that undermines South Africa’s economic recovery potential because it cannot fulfil its basic mandate of efficiently running trains and port terminals across the country.

Transnet’s rail network is a crucial cog in South Africa’s economy, responsible for moving to markets most of the iron ore and coal that is produced in the country. However, Transnet trains are often delayed or don’t move at all due to poor management of rail systems, cable theft and vandalism.

The volume of goods railed by Transnet has gone in the wrong direction. In 1996, Transnet moved 56mt of coal on the coal rail line to the Richards Bay Coal Terminal. Coal volumes peaked in 2017 at 76mt but fell to 72mt in 2020. In 2021, volumes were down again to 58mt and remained flat at 58.3mt in 2022. Volumes declined further in 2023 to 48.7mt. 

Transnet ports are miles behind in terms of efficiency, container loading and waiting times, and rapidly losing market share and investment attractiveness to more efficient port operators on the African continent. Transnet’s container ports (mainly Durban and Cape Town) are among the world’s worst, scoring in the bottom 10 of the 348 ranked in the World Bank’s latest Container Port Performance Index.

To fix these problems, Phillips and the Transnet board will have to embrace the private sector as a partner for delivery. The SOE will bring in the private sector to run trains independently by May and to invest in infrastructure. On the port operations side, Transnet is expected to finalise its partnership with a private sector company by April to upgrade a container terminal at the Durban port.

Gordhan also announced the appointment of Nosipho Maphumulo as the group CFO. Maphumulo currently holds the CFO position at Eskom Rotek Industries, which is a subsidiary of Eskom that provides construction, maintenance and transportation services to the power utility’s operations.

A business source close to Transnet operations told Daily Maverick that the pick of Maphumulo was “underwhelming” as she is largely unknown in the market and does not bring first-hand experience in raising or restructuring debt. 

Like Phillips, Maphumulo faces a Herculean task as the new Transnet CFO. With debt of more than R135-billion and financial losses running into billions of rands, Transnet is increasingly at risk of defaulting on debt repayments.

Read more in Daily Maverick: Government throws a R47-billion support package to get Transnet back on track

Because of its financial crisis, lenders are wary of providing more money to Transnet to fund its operations. This is why Transnet, in recent months, has opted to refinance or roll over debt repayments over a new period rather than settling them. Transnet’s debt of more than R50-billion is due in the next three years. DM