BUSINESS MAVERICK
Harbouring good intentions: Transnet’s ports to be corporatised 15 years after legislation came into force
South Africa’s president is on a drive to announce structural reforms that will unlock growth and stimulate job creation. Last week it was the announcement that private companies could generate 100MW of electricity for self-use, and the partial privatisation of SAA. This week it was to announce a measure that will help unlock efficiencies in South Africa’s poorly performing ports.
Almost 15 years after the National Ports Act came into effect on 26 November 2006, President Cyril Ramaphosa has announced that the Transnet National Ports Authority (TNPA) will be corporatised and established as an independent subsidiary of Transnet SOC Ltd.
This critical step was a key part of the legislation that was designed with the modernisation and efficient operations of South Africa’s ports in mind.
The company will have its own board of directors which will be appointed by the minister of public enterprises and not Transnet.
“This will create a clear separation between the roles of the infrastructure owner, which is the Transnet National Ports Authority, and the terminal operator, which is Transnet Port Terminals,” Ramaphosa said at the announcement in Cape Town on Tuesday.
“The functional and legal separation of these roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency.”
In particular, he added, it will mean that revenues generated by the ports can be invested in port infrastructure, both for the replacement of old equipment and for the upgrading and expansion of our ports.
The creation of a separate subsidiary will allow TNPA to make its own investment decisions and will ensure that it treats all terminal operators fairly and equally in the interests of port users.
President Cyril Ramaphosa with Transnet CEO Portia Derby and staff members shortly before a media briefing where the president announced the establishment of the Transnet National Port Authority. (Photo: Elmond Jiyane, GCIS)
The news will be welcomed by independent operators of cargo terminals, as well as shipping lines calling at the ports, who have long complained about poor efficiency and high charges.
“The development of high-quality and efficient container port infrastructure is a key contributor to successful, export-led growth strategies both in developing and developed countries,” said Martin Humphreys, lead transport economist and global lead for transport connectivity and regional integration in the World Bank.
This was ahead of the World Bank’s release of its inaugural “Container Port Performance Index 2020”, released in May. The index painted an unflattering picture of South Africa, ranking the port of Cape Town 347th out of 351 ports globally; Durban 349th and Nqura 351st — stone last.
South Africa’s ports were ranked lower than those of Djibouti, Abidjan, Beira, Maputo, Walvis Bay, Dar es Salaam and Mombasa.
This will not be news to Transnet, whose annual report for the year to March 2020 noted that operational performance has been declining at the ports of Durban, Cape Town, Gqeberha and Coega for several years.
This poor performance, which is measured by ship anchorage waiting time (on average 47-80 hours) and average ship turnaround time (39-72 hours) among others, has a negative impact on South Africa’s competitiveness by driving up costs and reducing the competitiveness of exports.
As a result, TNPA has embarked on a turnaround strategy to improve the reliability of the current fleet of equipment across all terminals by replacing equipment that had passed its useful life, recruiting additional gangs, filling existing vacancies and addressing employee concerns to improve staff morale.
But this has not gone far enough, fast enough, causing the City of Cape Town — one of the country’s key channels for exports and imports — to establish a port task team to address issues. This brought together stakeholders from across the port logistics value chain to find solutions to the challenges facing the Port of Cape Town, in particular.
“I welcome today’s engagement with President Cyril Ramaphosa and the announcement of an independent Transnet National Ports Authority,” says Western Cape premier Alan Winde.
“An efficient and world-class port will go a long way to bolster the province’s agricultural sector, which is a significant exporter in our province. By supporting the port, and this industry, we will unlock a greater number of job opportunities for those who need it most.
President Cyril Ramaphosa announced the establishment of the Transnet National Port Authority (TNPA) as an independent subsidiary of Transnet during a media briefing in Cape Town, South Africa on Tuesday 22 June 2021. (Photo: Leila Dougan)
“We must strive to match the outputs of other major port cities and in doing so, bring on board private partners who can assist us in achieving this.”
While the announcement has allowed for the creation of TNPA as an independent subsidiary of Transnet, the National Ports Act goes further and allows for the creation of TNPA as a state-owned company in its own right.
“This is the first step of the changes that were envisioned by the act,” says Andrew Pike, head of ports, terminals & logistics at law firm Bowmans.
“While it is not clear whether the government will go this far, this first step is important as it ensures a separation between the player, Transnet Port Terminals and the referee, TNPA.”
This will also promote more competition in the ports and ensure that TNPA is able to play a bigger oversight role over all terminal operators, he adds.
Removing the structural constraints that are holding back economic growth in the country is a priority being driven by the president.
“I am concerned about the long periods that it takes to get things done in South Africa. I would like everything we do in terms of regulation or legislative process to be cut by half. This is what puts the brakes on economic progress,” he said in a deviation from the prepared notes.
“This is an indication that Transnet will intensify efforts to transform its core business and serve the SA economy.” DM/BM
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About time……. just like all our SOEs, totally dysfunctional. The most inefficient ports in the world ! Disgraceful. It will only work if no ANC cadres are appointed.
A welcome initiative towards reducing central Government paranoia with control. We need more, and more quickly. Letting off, removing the handbrake of bureaucracy. Another “nice one Cyril”. For one man he is making a lot progress – the integrity commission – hopefully implementing the full scope of the Glenister judgement and NEC decisions of 2020 and Feb this year – a new Chapter 9 institution, Infrastructure SA and the public private project driven infrastructure lead growth initiative, reeling in at least some of the bad guys…etc . Don’t agree with the ANC ideology, policy or way of doing things, but credit where credit is due. For the time being, he’s our best hope for some common sense to get South Africa growing.
Well put. Telkom is a good role model and hopefully will be followed for all SOE’s
Yes but… I have become so cynical, what’s the catch?? Does this not create further opportunity for trough feeding?
Why do we need to create more, complicated structures when the blatantly obvious solution is just hire competent people?
And what happened to the corruption investigation of the crane contract with Liebherr?
All this will be meaningless unless appointments are made on merit so that competent people are appointed who can actually do the job. Cadre deployment and “transformation” appointments will continue the existing dismal downward spiral.
A 23 years delay! In 1998 the ‘Moving South Africa’ strategic framework for improving transport in South Africa carried out by the then well run Department of Transport under the guidance of Minister Mac Maharaj identified port inefficiencies as one of four major issues holding back development in the country. Yet Transnet did nothing to address the existing poor situation, but rather came up with a ‘pie in the sky’ proposal for a new dugout harbour in Durban. This scheme has since been abandoned, I hope.
Let’s hope that dugout harbour idea has been dropped. What kind of thinking takes perfectly located, prime industrial land, digs a hole and fills it with water when the existing port is operating at 30% efficiency or less ?
The exciting thing about living in this country is that we can never surprised by anything, no matter how stupid or airy fairy.
Small steps forward after too much time. Hopefully experienced and efficient people will be put in charge and not ANC cadres.
Let us hope that this does not become another “cadre” run entity like the so called SAA privatization.
HERE COMES THA CHINESE INVESTMENTS? BELT AND ROAD IN SOUTHERN AFRICA. BEFORE WE KNOW IT THE CHINESE WILL OWN THE PORTS!
This rationalization will work only if people of ability and integrity are appointed. Otherwise another ANC feeding frenzy of which we are Oh so sick!!!
The national and international yachting community also has a vested interest in these developments. For a number of years there were examples where SA authorities have tried its level best to kill the industry. Facilities for small craft are fast disappearing in most harbours along the country’s coast line.
Naturally, this will not only lead to the total disappearance of SA yachting, but international yachts will simply not visit this part of the world, contributing to further isolation and less development opportunities for citizens.