The Road Freight Association (RFA) says the decision last week by the Durban high court temporarily interdicting Transnet from concluding a multi-year deal to bring in private participation at the crown jewel of SA’s port system, the Durban Container Terminal Pier 2 (DCT2), has left it disheartened.
RFA CEO Gavin Kelly on Friday reacted to the court’s decision to temporarily bar the freight and rail operator from sealing the 25-year concession deal with Philippines-based multinational terminal operator International Container Terminal Services Incorporated (ICTSI).
The court found the approach of Transnet in identifying ICTSI as the preferred bidder was “potentially flawed and prima facie unfair to the other bidders”. The matter is now headed back to the courts, where losing bidder APM Terminals (APMT), a subsidiary of AP Moller-Maersk is seeking a final order declaring the deal unlawful.
Kelly said it was unfortunate that the move to introduce private sector participation at DCT2 was held up in the courts.
“The RFA trusts that, through the court process, a fair and transparent introduction of private players into the Port of Durban (and other ports) will now start and become a reality. We cannot wait any longer. We cannot continue to be a second or last choice for those international shipping businesses, companies and industries that wish to do business within and to the north of SA,” Kelly said.
“The association supports the initiatives to bring private players into the Port of Durban. It further supports a transparent and fair process ensuring that SA gets the best value possible for the price paid, as well as a system that will be innovative, efficient and progressive to meet the demands of the future, not just the demands of today.”
The DCT2 project is the cornerstone of SA’s infrastructure, pivotal for economic stability and growth. DCT2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of SA’s port traffic. Over the past few years, congestion at the terminal due to shipping traffic and limited operational capacity has led to backlogs at the Port of Durban.
The hurdles Transnet will have to jump at the main application is to show cause it was lawful for it to allow ICTSI to use its market capitalisation to meet the solvency requirements of the deal, and why it ignored two internal pieces of advice that this was a wrong approach.
Without its market capitalisation, ICTSI’s solvency ratio came in at 0.24, well short of the tender requirement of 0.4. The Manilla-based group was the only company allowed to use its market capitalisation to meet the threshold.
Transnet chair Andile Sangqu said the entity would approach the court to secure a “preferent date for the hearing of the review application”.
“The appointment of a partner to operate DCT Pier 2 is the cornerstone of [our] corporate strategy, alongside many other initiatives in different parts of the business already under way,” Sangqu said.
“Transnet will abide by the interim interdict, as part of building public trust in the organisation’s governance and procurement processes as well as to further expedite conclusion of the matter. The organisation’s commitment to the highest standards of accountability and transparency through good governance is unwavering.”
APMT said it was confident the court would still rule in its favour in the main application.
“The court has granted the interim interdict pending the outcome of the review of Transnet’s decision to award the contract to ICTSI. This is a welcome development, given how the process has been run,” said APMT’s spokesperson.
“We will commence our preparations for the second part of the legal review process with confidence, and we remain committed to playing a role in developing SA’s infrastructure and contributing towards its economic growth. We stand ready and well-placed to do so upon being given the opportunity.”
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