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Ports authority to become an independent subsidiary of Transnet

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Ports authority to become an independent subsidiary of Transnet

The Port of Cape Town
The Port of Cape Town

22nd June 2021

By: Yvonne Silaule
Contributor

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President Cyril Ramaphosa has announced that the Transnet National Ports Authority (TNPA) will become an independent subsidiary of Transnet.

During a site visit to the Port of Cape Town on June 22, the President commented that the creation of a separate subsidiary would allow the ports authority to make its own investment decisions and ensure it treats all terminal operators fairly and equally.

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The independent TNPA will have its own board of directors, to be appointed by Public Enterprises Minister Pravin Gordhan by June 30.

Ramaphosa noted that the weak performance of South Africa’s ports was the result of structural challenges in the logistics system and operational inefficiencies and that creating a clear separation of the roles of the infrastructure owner and the terminal operator between an independent TNPA and Transnet Port Terminals would address the worst of the challenges.

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“The functional and legal separation of such roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency.

“In particular, 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,” he said.

Transnet would remain the sole shareholder of the subsidiary to prevent any negative impact on the group’s balance sheet, and to ensure that the ports authority remains an important part of the Transnet group.

He assured stakeholders that no jobs would be lost as a result of the creation of the new subsidiary.

Ramaphosa asserted that the creation of the independent subsidiary was a significant development because it had been delayed for more than 15 years since the National Ports Act was promulgated.

“As part of our Economic Reconstruction and Recovery Plan, we are making progress in overcoming long-standing obstacles and bringing an end to delays in the implementation of reforms.”

“Together with the restructuring of Eskom, this is part of our ongoing effort to reposition and transform our State-owned enterprises so that they can be profitable, sustainable and competitive and can play a developmental role in our economy.”

The President encouraged the private sector to partner with the State to improve terminal operations and to invest in new infrastructure, as is already the case in several of the bulk cargo terminals.

REFORM OF ENTIRE PORT SYSTEM

Gordhan argued that separation of the port authority signalled a "reform of the entire port system in South Africa".

He said the the authority would seek to attract investment, while acting as landlord, developer of the ports and provider of marine services.

"This will then revamp the structure of the ports system in South Africa," he said, revealing that upcoming requests for information, which would be issues in the coming months, would indicate to Transnet the kind of interest that there was from different stakeholders, as well as what their needs were.  

Business Unity South Africa CEO Cas Coovadia said this was a "significant step in the right direction".

"To the extent that this will unlock investment and increase opportunities for cooperation with the private sector – the users of our ports infrastructure – this can only be in the national interest.

“This announcement, on the back of the announcement by the President on lifting the ceiling for embedded generation to 100 MW, is a welcome trend in which the President is taking decisive steps necessary to instil confidence among investors and to signal South Africa is on the road to economic growth.

“Whereas business has been concerned about the underperformance of our ports for some time and has been vocal in its interactions with social partners on the topic, the establishment of an independent TNPA will allow the collective focus to move away from challenges towards innovative solutions,” he said.

Western Cape Finance and Economic Opportunities Minister David Maynier has welcomed the President's announcement.

“The Port of Cape Town has experienced significant operational challenges as a result of ageing infrastructure and equipment, staffing shortages and weather disruptions. And so, we welcome the short-term measures being put in place to improve port efficiencies and we remain committed to working with the management team at the Port of Cape Town.

"We also welcome the establishment of the independent TNPA and the opportunities this will create to increase private sector investment in port operations and infrastructure, which will grow the economy and create jobs in the Western Cape,” he said in a media statement.

Western Cape Premier Alan Winde, who visited the port with the President and other government officials, said the Port of Cape Town was among the world’s most popular trade routes and one of the busiest in South Africa.

"It has immense potential and, with the right maintenance and investment, it could play a leading role in driving our province and country’s economy forward.  

“An efficient and world class port would also go a long way in bolstering 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. 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," he said.

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