Gordhan wants Transnet to secure R100bn infrastructure investment into SA ports

Public Enterprises Minister Pravin Gordhan has an ambitious goal of getting state ports and rail giant Transnet to secure up to R100 billion in new infrastructure investment into South Africa’s ageing and constrained ports over the next five years.

On Monday, Gordhan and Transnet Group CEO Portia Derby announced plans for securing private sector partners and investment into Transnet’s port network over the next five to ten years as part of the government’s broader economic reforms drive aimed at unlocking investment and bolstering the country’s growth and competitiveness.

Requests for information (RFIs) are going out to gauge market appetite from the private sector to invest in South Africa’s ports, which have historically been controlled and developed by state-run monopoly Transnet and Transnet National Ports Authority (TNPA).

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As part of the first round of RFIs, Gordhan says Transnet is looking for local and international companies to invest billions of rand into terminal operations in the Port of Durban and Port of Ngqura (part of the Coega Industrial Development Zone, north of Port Elizabeth/ Gqeberha).

Transnet, which has historically been profitable despite also being entangled in state capture during the Zuma administration, does not have the balance sheet to undertake the kind of mega infrastructure investment needed to boost capacity, efficiencies, and competitiveness of SA’s ports, especially the Port of Durban that handled over 60% of the country’s container traffic.

Gordhan and Derby are hoping that the RFIs will result in serious interest from local and foreign investors and key players in the ports, terminals and maritime industry.

The first few opportunities being punted include investing into Durban’s major Pier Two Container Terminal; the expansion of the Point Container Terminal also in the Port of Durban; and, container terminal expansions in Ngqura.

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While the projects in Durban and Ngqura are being highlighted, Gordhan stressed that the Department Public Enterprises (DPE) and Transnet are eyeing “investment of R100 billion across SA’s ports system over the next five years”.

A large chuck of the envisioned investment is expected to go into the Durban Port, which is reaching capacity of around 2.9 million TEU (Twenty-foot equivalent unit) containers per year.

“The port of Durban alone is expected to see investment of around R100 billion over the next 10 years,” Gordhan added, reiterating a figure mentioned by President Cyril Ramaphosa during a government tour of the Durban port earlier this year.

He said that Transnet is busy finalising the Durban Port Masterplan, which aims to ensure the port continues to handle 60% of SA’s import and export container traffic with major infrastructure investment plans on the cards.

“These are massive investments in the economy — from Transnet itself and South Africans and overseas investors — which [are] quite important in order to demonstrate confidence in our economy, but also to improve the infrastructure in relation to the logistics system in South Africa,” he stressed.

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Gordhan said following the RFI’s and then a RFQ (request for quotations), an official request for proposals (RFPs) would go out by November this year and close in February next year. Between March and June next year, bids will be evaluated and are expected to be awarded.

This means the DPE and Transnet want to have the first round of investments with the private sector into the country’s ports signed within a year, and consequently launch construction or see investment into port terminal infrastructure being expedited.

While neither Gordhan nor Derby made mention of any specific private sector partners being targeted, the recent announcement by Dubai-based global ports giant DP World of its buyout offer for JSE-listed logistics group Imperial is worth noting.

DP World is also a joint-venture partner with JSE-listed Grindrod Limited in operating a terminal at the Port of Maputo in Mozambique and has a presence in several other African countries.

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Meanwhile, Derby said during the briefing that investments into the Durban Port until 2032 is set to see the port’s container or TEU handling capacity almost quadruple, from the current 2.9 million TEUs to 11.3 million TEUs.

However, this is based on all infrastructure projects as part of the Durban Port Masterplan going ahead, including a super port terminal in the middle of the harbour.