Transnet failure: SA’s biggest port to be run by private firm

  • Transnet will no longer be running Durban’s Pier 2, which handles 46 percent of all the country’s port traffic.
  • Operations will now fall to Philippine private firm ICTSI, which won a contract to do so in July last year.
  • ICTSI is slated to help out the faltering Transnet, which among ailing infrastructure and bad maintenance has a debt of over R22 billion.

A private company from the Philippines will now operate Durban’s Pier 2 port, one of the largest in South Africa, taking over the reins from government-run Transnet. This was after the firm, International Container Terminal Services Inc (ICTSI)’s contract was finalised after financial due diligence. The announcement was made on Monday.

Ailing infrastructure, non-digital and outdated equipment and a failure by the government-run Transnet to correct its wrongs in the last 15 years led to a crippling backlog at the entity’s Durban ports in December, costing South Africa millions if not billions of Rands. Government rushed to bail out Transnet, with Treasury setting aside R47 billion to pay off debts and buy the right equipment.

As of December 2023, Transnet was wading through R22.8 billion in debt.

According to Intellinews, the port that ICTSI will now operate handles 72 percent of all the throughput from the Port of Durban, and 46 percent of all South African port traffic. The company was selected last year in July as the preferred bidder. The contract will last 25 years.

“The partnership [with ICTSI] will have a positive impact on Transnet, container supply chains and on the competitiveness of South Africa’s economy,” the company said in a statement. Some non-financial processes are still underway between government and the firm, but these are expected to be concluded “without undue delay.”

Transnet, which operates the country’s ports and rails, has struggled amid grievous lapses in maintenance. Enormous congestion at its ports, the latest of more than 20 days, has been further worsened by a lack of functional rail networks, relegating the majority of the country’s freight to road traffic on trucks.

The company’s rails are in such disarray that Transnet investigated allegations about unlicensed trains travelling through South Africa, loading and unloading illicit freight. It said at the time that there was no evidence to back up the allegations of “ghost trains.”

The deal struck between Transnet and ICTSI follows the appointments of a new CEO and chief financial officer at the government entity last week, in Michelle Phillips and Nosipho Maphumulo, respectively.

Transnet’s board recently placed Transnet Port Authority (TNPA) CEO Pepi Silinga and two other managers on suspension over allegations of procuring tenders to the benefit of associates, which saw costs at the parastatal leap from R80 million to R300 million.

Last week, ICTSI reported solid earnings to close out its 2023 financials, posting $1.51 billion in earnings before tax from its international port operations. The company operates 32 terminals across 19 countries. In Africa, it operates ports in the DRC, Cameroon, Nigeria and Madagascar.


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