Labour unions imperil billionaire’s port takeover

South Africa’s powerful labour unions could scupper the nation’s plans to sell a stake in sub-Saharan Africa’s biggest container port and have it operated by Filipino billionaire Enrique Razon’s International Container Terminal Services.

The United National Transport Union and South African Transport and Allied Workers Union are demanding that ICTSI agree to no job cuts for the duration of the 25-year contract, their general secretaries said. They submitted this and other demands to ICTSI and Transnet

Read: Transnet selects Philippines-headquartered port operator for Durban Pier 2

They submitted this and other demands to ICTSI and Transnet, South Africa’s state port and freight-rail company, before December but say they have yet to get a response. Transnet says it has engaged with them.

“We doubt they will agree to our conditions,” said Jack Mazibuko, the general secretary of Satawu, who added that his union plans to write to the parties again to demand an answer.

Should the transaction — announced in July — be scrapped, it would mean that South Africa’s first attempt to sell an equity stake in one of its struggling ports had failed. The near collapse of rail and port services offered by Transnet is limiting the nation’s exports, reducing its tax revenue and causing growth to stagnate.

It would also be another setback for Public Enterprises Minister Pravin Gordhan, who has been pushing for more private-sector involvement in a bid to boost the performance of moribund state firms.

The sale of a 51% stake in the once-bankrupt national airline, South African Airways, has yet to conclude after being announced in February 2022. Last month, Transnet halted a process to allow a private operator to run a key freight-rail artery. The company is behind schedule in moving ahead with plans to have private companies build a new port on the northwest coast, documents seen by Bloomberg show.

No job cuts

“The ultimate outcome of this process must enhance the productivity and efficiency of the port terminals,” said Ellis Mnyandu, spokesman for the Department of Public Enterprises, who said while the minister has met the leaders of both unions, the department doesn’t get involved in procurement processes. “There must be no job losses and the conditions of services must remain the same,” he added.

Many labour unions, including Satawu, are closely aligned to the ruling African National Congress, of which Gordhan is a member.

Under the agreement, ICTSI will pay an undisclosed amount for just under half of Durban Container Terminal Pier 2 and will run and expand the facility, which accounts for three-quarters of the volumes that passes through the port in the southeast of the country and 46% of the nation’s total port traffic.

The plan would be to expand its annual throughput to 2.8 million twenty-foot equivalent units from 2 million currently.

Steven Leshabana, the president of Untu, confirmed the demand. ICTSI declined to comment.

Transnet said it has held numerous consultations with the two unions “primarily focused on the treatment of employees,” and said workers won’t lose their jobs as they cross over to the joint venture. Expected growth will minimise the risk of future job cuts, the operator said.

Assets at the terminal are currently worth R2.5 billion and at the end of the contract, Transnet will buy the shares back from the partner, the South African company said. Before the deal can be concluded, agreements with labour must be finalised and a due diligence carried out in ICTSI, Transnet said.

“While the value of the planned transaction cannot be disclosed, the value to South Africa is clearly evident,” Transnet said. The terminal “has lost regional and global competitiveness due to outdated infrastructure and operational challenges,” it said, saying the purchase price will be invested in equipment.

In a 2022 World Bank index of container-port performance, Durban ranked 341st out of 348 and two other Transnet ports were in the bottom 11.

ICTSI, which operates terminals across six continents, was one of six bidders for the contract, Transnet said in July.

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