Transnet seeking private partners for R100bn upgrade of Durban port

Transnet Port Terminals plans to create a 'super terminal' in Durban which will enable the port to handle very large vessels and improve port efficiency. Stock photo.
Transnet Port Terminals plans to create a 'super terminal' in Durban which will enable the port to handle very large vessels and improve port efficiency. Stock photo.

Transnet is looking for private investors to partner in the R100bn expansion of the Durban port.

Public enterprises minister Pravin Gordhan told journalists on Monday that if everything worked out well, there would be a massive increase in the capacity of the Durban port. It would then handle almost 60% of the container traffic into and out of SA.

What is crucial is for the authorities in KZN and eThekwini to create the conditions that will be necessary in order for this kind of investment to take place,” he said.

Gordhan said a port master plan had been developed and will serve as the basis for investment both in respect of port infrastructure now governed by the Transnet National Ports Authority (TNPA) but also in respect of the terminals and the freight infrastructure that services the ports.

Two critical reforms have come to the fore. The first is the announcement by the president in June this year and the establishment of the National Ports Authority as an independent subsidiary of Transnet,” he said.

Announcing the reforms in June, Ramaphosa said they were necessary to modernise and transform the network industries to increase efficiency, reduce costs and make SA's exports more competitive.

On Monday, Gordhan said significant progress had been made in establishing the infrastructure of the subsidiary and the kind of role that it would play in relation to investments in each of the ports to facilitate the efficiency of the ports themselves.

It is hoped that by October this year a further RFI [request for information] would have  been issued by the TNPA to establish market appetite for the building of the Point terminal and that will be a huge infrastructure investment in respect of the Durban port,” he said.

The second key reform area was exploring the potential for investment in the port terminals in Durban and in Ngqura in the Eastern Cape. Gordhan said Transnet was due to issue two RFIs in respect of the second aspect of the reforms on Monday.

These reforms are in line with the structural reforms that the president and government have indicated will be forthcoming from Transnet and from other entities.”

He said this was further demonstration of government's commitment to continue with the structural reforms in improving the efficiency of its logistics infrastructure and of creating opportunities for partnerships with South African business and international businesses in bringing the best of breed in knowledge and technology to SA and the required cash to undertake the upgrading of infrastructure and equipment at the ports.

Gordhan said after the issuing of the RFIs, there will be further engagements with those interested in respect of an RFQ between now and September, and later in the year, between November and January, a proper request for proposal will be entertained.

By February next year, a bid evaluation process will be undertaken and between March and June next year, there will be the finalisation and approval of the bids that have been received by Transnet.

Transnet's group CEO Portia Derby said they were going to the market with the RFIs to look for potential partners for Transnet Port Terminals to deliver the operating services at the container terminal at Pier 2 as well as at Ngqurha's container terminal.

It's really important that it is clear that we are going into the market to test the appetite. We are still in the negotiation process, so it's a constant discussion and working with the unions to arrive at what ultimately would be the most ideal partnership ...”

Among their plans in Durban was to create a “super terminal” which will enable the port to handle very large vessels which will improve port efficiency, said Derby.

In Islandview, we would like to widen Area 4 into a massive terminal to improve our efficiencies,” she said.

A series of projects would follow until 2032 when they should have the full capacity.

Derby said they estimated the costs at no more than R100bn. The company is looking to keep the costs as low as possible and to complete the work within the stipulated period. This is why having partners was crucial to front-load the development given the state of the company's balance sheet, she said.

Transnet board chairperson Popo Molefe said it was not true that they were privatising public assets.

“In reality that is not what we are doing. We will continue to own those assets. They will resort under the state. What we are doing is to invite the private sector to participate on key infrastructure projects that we are embarking upon and in solutions that are necessary,” he said.

He said they were dealing with these matters within the context in which the country has been downgraded many times, increasingly making access to funding very difficult and expensive.