Manila-based ICTSI to develop Durban Container Terminal Pier 2
South Africa's privatisation moves ahead as Pier 2’s current capacity of 2mn TEUs is planned to increase to 2.8mn TEUs
Transnet SOC (Transnet), a South African Government state-owned company (SOC) that owns South Africa's railway, ports and pipelines infrastructure, announced the selection of International Container Terminal Services (ICTSI) as the preferred bidder for the 25-year joint venture with Transnet Port Terminals (TPT).
The JV will operate and develop its flagship Durban Container Terminal (DCT) Pier 2 at the Port of Durban, says a release from ICTSI.
"DCT Pier 2 is Transnet’s biggest container terminal, handling 72 percent of the Port of Durban’s throughput and 46 percent of South Africa’s port traffic. The terminal has 1,760 metres of operational quay length and 120 ha of container storage and backup area."
Final award is subject to completion of legal agreements between Transnet and Manila, Philippines-based ICTSI, the release added.
“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port," says Portia Derby, Chief Executive, Transnet Group. "We are delighted to have a global player of ICTSI’s standing on board to drive this process."
The partnership with ICTSI will help reposition the terminal for best practice performance, ensuring growth in volume throughput, and will support the terminal in providing operational and commercial support to access global shipping line call routes, says a release from Transnet.
"This will not only improve the logistics associated with servicing South African ports but will play a significant part in stimulating exports and imports. This is a growth strategy for Transnet where Pier 2’s current capacity of two million TEUs is planned to increase to 2.8 million TEUs. This is aligned with plans by Transnet National Ports Authority (TNPA) to increase the current container capacity in the Port of Durban from 3.3 million TEUs to an eventual envisaged capacity of 11.4 million TEUs."
Derby says: “The partnership in Pier 2 is a major step forward for our programme to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth."
A total of 18 responses were received to Transnet’s initial call for request for interest in August 2021, nine of them from global terminal operators. Following this, a total of 10 bids were shortlisted in response to a request for qualifications. Of the shortlisted respondents, six bidders submitted proposals.
Key elements of the transaction are as follows:
* A new company will be formed to manage the operations at DCT Pier 2, in which Transnet will have majority ownership of 50 percent plus one share.
* The term of the transaction is 25 years with an option to extend to a maximum of 30 years in the event that berth deepening of the North Quay at Pier 2 is delayed.
*Non-current assets will be transferred into the new company, together with customer and supplier contracts. The new company is required to achieve a minimum level 4 B-BBEE contribution status.
*The terminal operating licence and lease will be subcontracted to the new company, after seeking approval from Transnet National Ports Authority.
*DCT Pier 2 employees will be seconded to the new entity. There will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of the private sector partner.
"A way forward on the Ngqura Container Terminal process will be outlined in due course," says the release.
In the financial year 2021-22, ICTSI handled over 12.2 million TEUs and generated more than $2.2 in gross revenues from port operations with 11 000 employees.