Transnet moves ahead with US$6.7b port expansion plan

SOUTH AFRICA – Rail, port, and pipeline company Transnet has moved forward with its R100 billion (US$6.7 billion) expansion plans for the Port of Durban after issuing Request for Information (RFI) solicitations for potential private-sector investment partners.

The country’s President Cyril Ramaphosa first announced in April 2021 that the expansion of the troubled port precinct would require R100 billion (US$6.7 billion) in new investment over the next decade.

The upgrade of the port is aimed at improving efficiency at one of the country’s key drivers of economic growth and is part of structural reforms.

Public Enterprises Minister Pravin Gordhan yesterday said this was the second part of structural reforms to attract investment following the separation of Transnet National Ports Authority (TNPA) from the group.

Gordhan said TNPA had already started issuing RFI to the market for potential infrastructure investors.

He said a port master plan that will serve as a basis for infrastructure investment in the port had been developed and was undergoing consultation processes.

“It is hoped that by October this year, a further RFI will be issued by TNPA to establish market appetite for the building of the point terminal at the Durban Port,” Gordhan said.

“The second key reform area is exploring the potential for investment in the port terminals in Durban and iNgqurha, and today two RFI will be issued by Transnet.”

Gordhan said this was a further demonstration of the government’s commitment to improving the efficiency of its logistics infrastructure.

In June 2021, Ramaphosa announced the establishment of the TNPA as a wholly-owned independent subsidiary of Transnet in a bid to unlock the full potential of the country’s ports.

This means 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.

Transnet Group Chief Executive Portia Derby said the plan was to deal with capacity constraints such as terminal inefficiencies and congestion challenges at the port.

“What we are doing is inviting the private sector to participate in key infrastructure projects”

Popo Molefe – Board Chairperson, Transnet

Derby said they want to create a super terminal to handle very large vessels, increasing the current berth depth from 12.8m for container vessels to 16m for vessels calling port by 2032.

The Port of Durban has slipped from the top position in Africa to third due to slow turnaround times, truck congestion, ship berthing delays and anchorage times, and poor maintenance of equipment.

“Our estimate is that it should not cost us more than R100 billion, but we still want to make sure that we stress-test the numbers and come as low-cost as we possibly can within the period that we stipulated,” Derby said.

“That is why the partners are crucial for us to front-load the development given the state of our balance sheet.”

Transnet Board Chairperson Popo Molefe said as Transnet they would invite the private sector to participate in the rehabilitation of ports infrastructure.

Molefe said they were not privatizing the assets; they would continue to be owned by the state

“What we are doing is inviting the private sector to participate in key infrastructure projects,” he said.

“We do so by reminding you that our balance sheet, whilst it is resilient, is not adequate for us to meet challenges necessary for infrastructure funding costing over R100 billion.”

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