The leadership of freight and rail group Transnet on Monday put pen to paper to develop SA’s first liquefied natural gas (LNG) import terminal as public-private partnership projects take shape amid a push to improve the performance of the country’s logistics sector.
The agreement will see private outfit Zululand Energy Terminals operate the terminal for 25 years, with the project expected to introduce at least 6,000MW of gas-to-power projects.
“The operationalisation of this import terminal is essential in enabling gas-to-power initiatives for both independent power producers and Eskom as outlined in SA’s energy plans.
“With Transnet National Ports Authority’s (TNPA) investment boost of just over R7bn, the projected volume throughput for the LNG import terminal is at least 2-million tonnes per annum (mtpa) and could potentially reach over five mtpa over the concession period,” TNPA said in a statement.
Transnet also signed an agreement with FFS Tank Terminals to build and operate a liquid bulk terminal at Richards Bay.
TNPA CEO Phyllis Difeto said the agreements align with Transnet’s strategic pursuit of partnerships with the private sector.
‘Milestone’
“This milestone underscores our commitment to transforming the country’s logistics sector and being responsive to national energy goals,” Difeto said.
“Collectively, the projects contribute to the economic resilience of the uMhlathuze region, with significant job creation in construction, operations and port-related industries. These initiatives highlight our commitment to transformation and workforce empowerment.”
Premier of KwaZulu-Natal Thamsanqa Ntuli welcomed the investment into the province, which is key to Transnet’s operations.
“We are witnessing a demonstration of the infinite value of public-private partnerships which are key to unlocking the binding constraints of our economy by building infrastructure as the basis of sustained economic growth,” Ntuli said.
“This combined investment of over R7bn underscores the success of public-private collaboration, with the LNG project supported by a joint investment from TNPA (30%) and the Zululand Energy Terminals Consortium (70%).”
Transnet has a pipeline of several public-private partnership projects as it embarks on a journey to turnaround the performance of the country’s ports and rail network.
The biggest private sector participation across SA’s port network has been delayed by a legal challenge launched by the losing bidder.
The R11bn deal put on the table by Philippines-based International Container Terminal Services Incorporated (ICTSI) to operate Durban container terminal pier 2 (DCT2) is on hold after a challenge by APM Terminals, the port operating company of Danish logistics major AP Moller-Maersk.
At the heart of the legal challenge is that Transnet erred in allowing ICTSI to calculate its solvency ratio using its market capitalisation to secure the 25-year contract to develop and manage the Durban container port.
This decision, which inflated ICTSI’s solvency from 0.24 to the required 0.4, was made despite internal and expert advice warning against it.
ICTSI was the only bidder to use its market capitalisation to prove it met Transnet’s solvency requirements to qualify for the tender, which saw it comfortably pass the solvency condition.
In July 2023, Transnet declared ICTSI the preferred bidder for the 25-year joint venture to develop and operate DCT2.
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.
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