Public Enterprises Minister Pravin Gordhan says Transnet is looking to potentially work with private companies for the expansion of the Durban port to the tune of R100 billion by 2023.
Gordhan told reporters during a virtual briefing on Monday that – should government’s latest plans for Transnet pan out as expected – in ten years’ time, 60% of the container traffic into and out of South Africa will be handled by an upgraded Durban port.
In May, President Cyril Ramaphosa told Parliament that getting Durban’s port back to competitive levels was a critical part of government’s plans to lead the South African economy to recovery following the blows of the Covid-19 pandemic and more than a decade of lacklustre growth.
Gordhan said collaboration was a key element in handling Transnet’s ports and rail facilities and that Transnet had “reorientated” its strategy for eight key freight corridors dealing with different commodities and products.
Gordhan added that a ports masterplan was under development, in which terminal and freight infrastructure would receive attention, in line with Ramaphosa’s Economic Reconstruction and Recovery Plan.
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“There are two critical reforms that have come to the fore. The first is the announcement of the establishment of the National Ports Authority as a subsidiary of Transnet,” he said.
The second was a request for information (RFI) to gauge interest from potential private bidders for infrastructure at the Durban port.
After a request for quotations and a request for proposals, there would be a bid evaluation by next year, Gordhan said. The final bid approval should be concluded by June 2022, with upgrades to the Durban port completed by 2023.
Gordhan said the bid evaluation would be conducted in accordance with internal Transnet procedure, and that the RFI should be available in the next 24 to 48 hours.
Transnet CEO Portia Derby said that the utility was looking to work with a partner that could offer timeous delivery at the lowest possible cost.
Derby said the RFI would look for partners in terminal 2 and that Transnet would test the market appetite for the deal.
“We are still in negotiations and we are talking to unions about what would be the ideal partnership. We want partners who will assist us in our partnership for Durban.
“A super terminal will allow us to handle very large vessels which will allow us to improve efficiencies. In Islandview, we would like to widen the area. Area 4 will be developed into a massive terminal to improve our efficiencies,” Derby said.
Derby told Bloomberg that Transnet would also be looking for partnerships with private operators at its Ngqura port in the Eastern Cape.
Durban and Ngqura were among the worst-performing container ports in the world in 2020, according to research compiled by the World Bank and IHS Markit. The former is ranked last out of 351 sites on an administrative basis, while Nqgura is at the bottom of the statistical chart.
Transnet board chair Popo Molefe said taking the infrastructure drive to market did not amount to privatising its assets. He said Transnet would continue to be a custodian of infrastructure while it looked for partners in the private sector to improve the state and capacity of that infrastructure.
Molefe said Transnet was inviting the private sector to participate in key infrastructure projects it was embarking on, and to help find solutions for Transnet Freight Rail. This includes dealing with cable theft and the transitioning from reliance on electrical power and diesel to continue operating.
Molefe added the country had been downgraded by sovereign credit rating agencies many times, which made it increasingly difficult to get access to funding internationally.
He said Transnet was working on unlocking capital from inside of South Africa, and using that as an incentive to attract foreign direct investment in infrastructure.
– With Bloomberg
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