12 February 2001
It is indeed an honour and a privilege to welcome you on the occasion of the launch of the Durban Container Terminal Expansion Project.
This project is located within a broader strategy for restructuring State Owned Enterprises (SOEs) in South Africa. SOEs in South Africa are well positioned to play a critical role in the current phase of economic restructuring, where the focus will shift from macro economic stability which has already been achieved, to a greater emphasis on promoting increased growth of our economy. As President Mbeki indicated, in very clear terms, during his State of the Nation Address, " . . . the objectives we seek to achieve are moving the economy onto a high-growth path, increasing its competitiveness and efficiency, raising employment levels and reducing poverty and persistent inequalities".
As we move to an accelerated implementation of our restructuring programme, Government is committed to ensuring that the South African ports system becomes one that is comparable to the best in the world. It is our view in Government, that a restructured ports sector will undoubtedly give a major boost to South Africa's competitiveness and assist significantly in the promotion of South-South trade relations. In this regard, Government is finalising a national ports policy that will separate the ports functions into a development agency responsible for port infrastructure development and maintenance, port operations and a regulatory entity. This clear delineation of functions will ensure a sharper focus on the specific activities, thereby ensuring higher order efficiencies.
Noting that the efficiency in moving goods and products is becoming one of the key elements that enhance our ability to compete globally, the restructuring of Portnet has been located within a framework of a seamless logistics chain. As we move forward with the restructuring of Portnet, and the ports sector in general, Government is determined to inject private sector participation, investment and management expertise in the different ports activities. It is our view that more efficient port operations, coupled with the implementation of a new tariffing regime will give impetus to economic growth. The changes in production systems worldwide have created important opportunities for growth, relating to back-of-port logistics and Durban is well positioned to exploit these economic opportunities. With our emphasis on containerisation at the Durban port, these operations are likely to focus on higher value goods, relating to elements of the manufacturing sector that were highlighted for growth in President Mbeki's speech.
The announcement we make today is a watershed in the development of containerisation in South Africa. As you know, the reconfiguration of the Transnet pension fund debt has created an opportunity for SOEs in the Transnet stable to invest in critical public infrastructure that had hitherto been under-capitalised as a result of the large debt overhang. This is the first capital investment made since the advent of containerisation in South Africa in 1977, when the terminal was first commissioned. We believe that containerisation, as a growth sector in our economy requires investment impetus to ensure that we reposition this sector in line with the world trends.
I am therefore pleased to announce that an investment of R1, 34 billion has been approved for container expansion in Durban alone, over the next three years. This investment, coupled with the envisaged private sector investment via concessioning, will lead to the virtual elimination of ship waiting time over the coming years and thus reduce the shipping cost of cargo. Today's announcement, together with the Port Development Agency's announcement recently that it would reduce wharfage from 1 April 2001, is part of Government's overall strategy to ensure a reduction in the cost of doing business in SA. Furthermore, Government is scheduled to introduce a new tariffing regime at the end of this year that will see a change in the cost structure from an ad valorem to a "per unit" charge, thereby further reducing the cost of the international transportation of goods.
The R1, 34 billion capital investment in Durban port will lead to higher capacity at the terminal and will also involve the conversion of the multi- purpose terminal into a container terminal. Effectively, this means that there will be a reduction in the port's total breakbulk handling capacity. Over the years, there has been an excess of ports infrastructure capacity for breakbulk cargo and an undersupply of container capacity. Portnet will continue to review the capacity requirements of the various cargo types.
Through this project we hope to see significant and meaningful black economic empowerment opportunities emerging. There are opportunities for black entrepreneurs to be involved in ports construction as we deepen the habour and relocate some of the activities as indicated. Further, the focus on containerisation and the stimulation of back-of-port logistics has the potential to develop black entrepreneurs in the relatively new field of logistics management. We have already spoken to the Singaporean government to assist us in exposing our Black entrepreneurs to this new field of endeavour.
It is expected that there will be many spin-offs from this project, including job creation during the construction phase and further employment opportunities as a result of increased capacity of the Durban port. Apart from sustaining much needed jobs, this project will support Durban's economic growth vision initiative.
All spheres of government, in particular the Durban Metro, will need to continue to ensure that the Durban port is allowed to expand in a manner that exploits the opportunities outlined above. Our projections are that we can anticipate an above average container growth in Durban, having already witnessed growth in excess of 18% in the container business over the past year.
In conclusion, the ports restructuring programme presents us with an exciting opportunity to embark on a sustained growth trajectory for our economy. It is therefore important that all spheres of government, the private sector, and organised labour respond with urgency to this opportunity, to ensure that the Port of Durban is seen as a gateway for economic endeavour.
I thank you.
Enquiries:
Fani Zulu
Director: Communications
Ministry of Public Enterprises
082 451 0457