Transnet is moving super-slowly to implement the private sector partnerships it promised at its ailing port and rail facilities, with the state-owned group confirming that the new partner at its key Durban container terminal will only start in April 2024 at the earliest.
It also confirmed that no contract has yet been signed on a private rail deal announced a year ago.
Details of the long delays emerged as Transnet’s board announced on Friday that a turnaround plan for the business has been completed. The plan, which will be submitted to public enterprises minister Pravin Gordhan this week, outlines a series of operational and financial initiatives to stabilise Transnet, whose rail and port failures are estimated to be costing the economy R1bn a day in lost output.
But Transnet’s lengthy delays in bringing in private sector partners to turn around key operations will also cement the case for the reforms outlined in a new Roadmap for the Freight Logistics System in SA, details of which were leaked to Bloomberg last week.
The roadmap reportedly contains far-reaching proposals to allow private companies to access rail lines and concession ports and rail routes to private operators, and sets timelines. Though the roadmap proposes to take some of the control of the process away from Transnet, industry players are concerned it may not go far enough.
Transnet announced in July that it had chosen Philippines-based International Container Terminal Services (ICTSI) as its preferred partner to turn around the Port of Durban container terminal, which handles almost half of SA’s freight.
But the state-owned logistics utility told Business Day last week that it expects the contract with ICTSI to be signed only "by the end of the current financial year, once the due diligence and other processes have been concluded".
"The NewCo will begin operating as soon as the transaction reaches financial close, which is anticipated to be in the start of the new financial year, which commences on April 1 2024," Transnet said in an emailed response to questions.
The purchase price for ICTSI’s stake in the new operating company has not been disclosed but it is believed to be substantial. The delay means Transnet will not receive the funds in its account in time to allay the cash crunch it faces, with more than R10bn of its bonds maturing this year.
Transnet also said it has not yet concluded a contract with Traxtion Sheltam to operate the Kroonstad to East London railway line. It announced in October 2022 that it had chosen the company, which operates rail lines in several other African countries, as the preferred bidder. This was after Transnet received just two bids for the 16 rail slots it auctioned, but on terms that made them unattractive to most private operators.
Transnet surprised the market in January with a call for expressions of interest to operate and maintain the crucial rail corridor transporting containers between Johannesburg and the Durban container port. Transnet said last week that work on the container corridor operating lease is ongoing. A request for proposals will be issued before the end of its financial year.
The container terminal at Transnet’s Ngqura port was also meant to be concessioned out to private operators, and Transnet shortlisted bidders in August 2022 — at the same time as it shortlisted bidders for the Durban terminal.
However, it said last week that no bids were received for the Ngqura terminal, as bidders could not guarantee volume growth. "Transnet is reviewing options on how to get the [terminal] to full utilisation," it said.
Industry players said Transnet required bidders to guarantee to bring certain volumes to Ngqura, in an effort to deploy its underutilised capacity to develop it as a trans-shipment port. This suggested only those international terminal operators linked to shipping lines could have bid, but evidently the terms were not attractive enough.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.