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Transnet will not bring in private company to run container operations at the Port of Cape Town

By Larry Claasen

STATE-owned transportation group, Transnet is not looking to bring in an outside party to run its container operations at the Port of Cape Town.

The Western Cape Government and the City of Cape Town have called on Transnet to speed up the participation of the private sector in the running of the Port of Cape Town. Though Transnet has issued a tender to run the port’s liquid bulk terminal, it said there were no plans to bring in an outside partner to run its container operations.

Transnet, under its Recovery Plan, is implementing its Private Sector Participation (PSP) strategy, which sees it turning to private companies to help turnaround its underperforming operations.

This strategy has seen it grant a tender to Philippine based International Container Terminal Services, Incorporated (ICTSI) to run its Durban Container Terminal Pier 2 for 25 years.

It is also looking to bring in partners to operate its Transnet Rolling Stock LeaseCo, and its Liquefied Natural Gas (LNG) Terminal in Richards Bay.

The group is also looking for partners for its Ngqura Manganese Export Terminal (NMET) and the Richards Bay Dry Bulk Terminal.

However, those hoping to see the Port of Cape Town’s under container operations private sector management are set to be disappointed.

“Transnet is not actively pursuing a PSP for the Cape Town Container Terminal. However, considerable efforts are underway to enhance the terminal’s operational performance through collaboration with customers and industry. This includes initiatives such as procuring and deploying critical equipment within the terminal,” the group said in a statement in response to questions from CBN on the matter.

Not easy to outsource

Though Transnet did not elaborate on why it is not considering a PSP partner for the container operations at the Port of Cape Town, it pointed out that bringing in outside partners to run its operations was not an easy task, given the complexity involved.

To manage the PSP selection process it created the Joint Investment and External Partner Selection (JIEPS) framework. This framework includes developing a detailed business case with option analysis, a financial model, risk analysis, and due diligence to assess the value that the private sector can bring.

A decision is then made on whether a private sector partner is the best option. As a state-owned enterprise Transnet also requires certain Public Finance Management Act approvals from its shareholder and the National Treasury to enter such partnerships.

“The PSP process is complex and challenging, as demonstrated by the over 24-month period it took for Durban Container Terminal Pier 2 to reach financial close. The focus for the current financial year is to finalise these PSPs and move them to the execution stage.”
And even if everything goes to plan, there can still be delays in implementation.

This can be seen in a legal challenge by rival bidder A.P. Moller – Maersk A/S on the awarding of the Durban container terminal contract to ICTSI.

Transnet said the legal dispute has delayed the implementation of Durban container terminal contract with ICTSI.

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