Friday , 13 December 2019
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Transnet National Ports Authority (TNPA) has announced that has become necessary to suspend the Request for Qualification (RFQ) process for a private operator take over the financing, operation and maintenance of the Ngqura Container Terminal. The suspension was done under the terms of clause 10 of the RFQ. Accordingly TNPA has advised bidders that it will not be accepting any bids and that it will provide prospective bidders with an update in due course.

Ngqura container terminal privatisation put on hold

Commenting on the suspension announcement, South Africa’s Ports and Ship News said that the suspension came as no great surprise. Had the process gone through as originally publicised, Ngqura container terminal could have become the country’s first privately operated container terminal but this has to be qualified with the realisation that among the bidders it was highly likely that the current terminal operator, Transnet’s own terminal operating arm Transnet Port Terminals (TPT), would have been among the bidders.

When TPT was first constituted out of the old Portnet some 13 or so years ago with the creation of a port authority and separate port terminal operator, the intention was that TPT’s job was to operate the 16 port terminals while simultaneously preparing them for concessioning – the word ‘privatise’ not being in use because of union sensitivities. TPT was given three years in which to restructure the operational side of the port terminal businesses which would then be offered via a bidding process to private concessioners with TPT fading away, its job done.

The reality was that this was never going to go as planned. Firstly, the unions were never going to sit back quietly and allow port terminals to be placed in the hands of private operators, no matter what terminology was used. After the experience of Spoornet, Transnet’s railway division, which was later renamed Transnet Freight Rail, this should have been clear to Transnet, whose naivety was exposed in this respect.

Secondly, the problem with the master plan was that only some of the port terminals were going to be attractive to private terminal operators. Other smaller terminals would very likely have remained unwanted.

This period proved to be a major setback for South African ports, and Durban in particular, with a hiatus of three years when little or no infrastructure spending took place in the ports. Some of these, and the Durban container terminal in particular, remained in a state of perpetual congestion. TPT was left unsure whether to invest large amounts of money in urgently needed equipment which a private operator might or might not want or require.

As a result a there was little or no investment in infrastructure until ultimately the idea of concessioning was abandoned and TPT was instructed to restructure itself for a long haul ahead. Only then did TPT and TNPA begin to invest in new infrastructure and start looking at things like deepening some of the berths to enable larger ships to call.

At Ngqura it was different. For whatever reason Transnet lost the opportunity of privatising the new port from the beginning and in November 2011 the Cabinet approved the TNPA decision to grant a license to TPT to operate the port of Ngqura container terminal for an interim period of three years. It also lost the opportunity of automating much of the port operations in favour of becoming a large-scale employer of terminal personnel – thereby exposing itself further to union pressure.

The Cabinet gave instructions that the Ngqura development was “subject to Transnet National Ports Authority beginning a competitive process for the licensing of the Port of Ngqura in accordance with the National Ports Act”. This in turn led to the call this year for interested parties to participate in a process leading to the appointment of a terminal operator – a process that has now been suddenly suspended.

Given the experience of Transnet Freight Rail and the concessioning of branch lines – which is still dragging on after more than a decade – and the experience of TNPA saying it wanted to concession the ship repair facilities at South Africa’s ports, which has dragged on for several years with no resolution – is it inappropriate to wonder how long and in which direction the Ngqura concessioning will take?