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At a Crossroads
SOUTH AFRICA: AT A CROSSROADS
South Africa’s port sector is set for a major revamp including the ground-breaking step of off ering a container terminal concession to the private sector. Mike Mundy reports
South Africa’s port sector is at a crossroads.
It has been impacted by the recent unrest in the country which led to terminal closures and general disruption. Transnet Port Terminals issued force majeure notices for the Durban Container Terminal Piers 1 and 2, the Durban Roll-On/Roll-Off and multipurpose terminals, the Richards Bay multipurpose terminal and dry bulk terminals, and the Maydon Wharf bulk terminal. As of the end of July, however, the situation was progressively improving with a larger number of employees reporting for shifts following the recommencement of public transport services but with the port of Durban, the country’s main port, still facing problems relating to truck access due to road closures and fuel and food shortages. Progressive improvement was though, at this time, expected leading to an eventual normalisation of operations.
A NEW NORMAL
This ‘normal,’ however, is soon set to be a new normal with major structural changes lined up for the port sector including the corporatisation of the ports division of state-owned Transnet as well as the introduction of private sector expertise into container handling operations, an activity that to-date has been almost exclusively the province of Transnet.
These proposed changes, to be introduced at the behest of President Cyril Ramaphosa, form part of a broad-based package of structural reforms which so far have also seen the partial privatisation of South African Airways (SAA) and the announcement that private companies will be able to generate 100MW of electricity for self-use.
As explained by Ramaphosa, Transnet National Ports Authority (TNPA) will be corporatized, under legislation introduced 15
The new Durban container terminal ‘‘ will be offered as a concession… later this year
years ago. It will be established as an independent subsidiary of Transnet SOC. “This,” Ramaphosa said, “will create a clear separation between the roles of the infrastructure owner – TNPA – and the terminal operator, Transnet Port Terminals (TPT). The functional and legal separation of these roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency.” He further highlighted the fact that under this new arrangement revenues generated by ports can be reinvested in the sector spanning upgrading works, new construction and equipment purchase with TNPA making its own investment decisions in this respect.
Other stakeholders additionally point out that under this new structure it is logical that TNPA will be able to undertake a larger oversight role over all terminal operators, a step that has significant potential to contribute to the overall goal of raising port efficiency. Transnet’s Annual Report for the year ending March 2020 confirms that operational performance has been declining at the ports of Durban, Cape Town, Gqwberha and Coega for several years. Equally, it is well known that port users have long complained about poor service levels coupled with high costs at South Africa’s main container ports, especially where the export of perishable food products is concerned many of which are sold with relatively small margins of profitability.
PRIVATE SECTOR CONTAINER HANDLING
Prior to the announcement regarding TNPT’s corporatisation Ramaphosa also made clear his views on private sector participation in the hitherto mainly state operated container terminal sector. In an open letter to the public, he declared the intention to achieve a large-scale expansion of the port of Durban including a new container terminal to be built at the Point Precinct. This new terminal, he explained, will be offered as a concession with Transnet scheduled to bring this to the market later this year.
Other key works to be undertaken in Durban include the deepening of the Maydon Wharf channel to provide access to larger vessels and infilling between Pier 1 and 2 to deliver further new container capacity. A total investment of US$7 billion is envisaged with a principal outcome being upscaling container capacity from the present level of 2.9mTEU/yr to an eventual annual throughput capacity in excess of 11mTEU.
Also as an integral part of clearing the path for this to happen, and as a rationalisation in its own right, it is planned to move a variety of LNG and dry bulk operations from Durban to the port of Richards Bay. Effectively, this confirms the intention to consolidate and expand Durban’s position as a major container hub while also upgrading Richards Bay to an energy and dry bulk hub enabling it to capitalise on opportunities such as the large scale gas fields being developed off Mozambique.
8 Plans have been laid for a major
