Busisiwe Mavuso | The public-private partnership model will be crucial in upgrading SA’s ports
POSTED ON: April 29, 2022 IN by Admin
Transnet and the eThekwini municipality working together with the private sector must be applauded for the significant progress they’ve made in starting up operations at Durban port following the catastrophic flooding in KwaZulu-Natal earlier this month. This couldn’t have been an easy task as debris and logs reportedly littered the harbour after the flooding, disrupting shipping and making it necessary to dredge the port. Durban harbour plays a crucial role in our economy as it handles no less than 60% of the country’s shipments.
While the floods have been a setback to the port’s operations, difficulties at the harbour have been evident for some time. Delays and inefficiencies were common long before the July 2021 civil unrest and the cyberattack experienced by Transnet’s IT systems at the time, as well as the Covid-19 pandemic.
The recent World Bank and IHS Markit’s Global Container Port Performance Index shows that Durban (along with Cape Town, Gqeberha, and Ngqura) is one of the poorest performers internationally, loading and offloading containers at less than a third of the rate expected globally. Djibouti, Abidjan, Beira, Maputo, Walvis Bay, Dar es Salam and Mombasa are ahead of our ports in the index.
Transnet doesn’t have money for upgrades and maintenance as it was, according to the Zondo commission, the primary site of state capture in financial terms with corruption, fraud and racketeering prevalent at the SOE. The value of the malfeasance that took place was put at R41.2bn. Funds that should have been used to upgrade our ports and to buy harbour equipment such as ship-to-shore cranes disappeared into the pockets of entities linked to the Gupta family.
Today we have a situation where ships are spending days or weeks lying at anchor before they can be processed at our ports. This affects businesses across the port logistics supply chains who experience significant delays as well as financial losses. And after visiting the country, it is not unusual for vessels to again experience delays before they can depart our harbours. As a result, some shipping lines bypass our shores.
Both our agricultural and manufacturing sectors are suffering due to harbour holdups. An example is the citrus industry – the fruit spends an unreasonable amount of time in our ports, leading to disturbing headlines such as “Tons of fruit rot because of port chaos”. And in the manufacturing sector factories have had to halt production due to logjams in the supply of components.
I believe that the use of the public-private partnership model will be crucial in upgrading the country’s ports. I have no doubt that the private sector can and will play a more significant role in government-driven infrastructure, thereby reducing pressure on public finances and increasing the number of projects in the public sector investment programme. Even if government spends all it can on infrastructure development, the backlog in essential construction projects would take billions of rands and many years to address without the assistance of the private sector.
Last year, government acknowledged that it needed private partners for a R100bn “super terminal” at Durban harbour as part of a port’s masterplan in line with President Cyril Ramaphosa’s Economic Reconstruction and Recovery Plan. The improvements would make the port the biggest and busiest on the continent as the harbour’s capacity for container handling would grow from 2.9-million units to more than 11.3 million. At the same time, the establishment of the National Ports Authority as a subsidiary of Transnet was announced while government put out a request for information (RFI) to gauge interest from the private sector for infrastructure development at Durban and Ngqura ports.
The RFI has consequently received an extremely positive response from the market and the final bid evaluation process is expected to be concluded by June 2022, followed by the completion of upgrades to the port by 2023. This suggests that the improvements will not be in the form of major construction work but rather in maintenance and cargo handling. We need to speed up private-public partnerships. While we wait around for more significant port improvements, our harbours are being elbowed out of the picture by those of other African countries.
Not everyone is convinced that Transnet’s private participation model will work, given the SOE’s past record of corruption while others have called the model an indirect way of privatising the state logistics company. We must nevertheless push on with public-private partnership opportunities within Transnet. I am confident that our ports can regain the traffic they have lost. Efficiently run harbours can help bring prosperity to South Africa. Government’s plans to place our country on the path to economic recovery will not succeed unless our ports are restored to their former glory.
Mavuso is the CEO of BLSA. This article first appeared in fin24
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