Posted on August 23, 2023
As the government continues to privatise the state-owned entities partially, Transnet has refused to disclose the value of the acquisition deal between the entity and Manila-headquartered International Container Terminal Services (ICTSI).
In July, Transnet selected ICTSI as the preferred bidder for a joint venture to develop and upgrade the flagship Durban Container Terminal Pier 2.
Responding to questions from the Falcons, the state-owned entity refused to disclose the value of the acquisition deal citing the sensitivity around the deal.
“The value of the transaction is commercially-sensitive information that cannot be disclosed. Part of the proceeds of the transaction will be used to invest in Transnet Port Terminals (TPT) as part of the modernization of its equipment and operations, to improve the terminal’s capacity,” said Transnet spokesperson Ayanda Shezi.
Asked how the deal was structured, Shezi said: “The non-current assets, permits, and contracts for the ring-fenced business unit will be transferred into an incorporated special purpose vehicle, the “NEWCO”. The shares in the NEWCO at the date of transfer will be held 100% by Transnet. Transnet will then sell 50% minus one share at the price offered by the preferred bidder. Transnet employees will remain as Transnet employees and will be seconded to the NEWCO. The partnership is for a duration of 25 years.”
Shezi stated that consultation with organized labour commenced in August 2021 following the announcement by the Government of the intention to embark on port reforms, as part of the broader economic reforms agenda.
“Engagements with labour continue as implementation occurs. Transnet received approvals from the Department of Public Enterprises and the National Treasury, as required in terms of the Public Finance Management Act (PFMA), in July 2023,” she stated.
Over a 25-year term, ICTSI will partner with TPT to develop and upgrade Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic.
ICTSI is one of the biggest container terminal operators in the world and manages 34 terminals in 20 countries including ports in Australia, Indonesia, China, Mexico, and Brazil.
The group is listed on the Philippine Stock Exchange and was established in 1987 by billionaire Enrique Razon Jr. The Razon family has been involved in the port industry since 1916.
According to Transnet Port Authority managing executive Earle Peters who addressed the media on Thursday this week, the overhaul of the entity’s key container terminal in Durban is likely to begin within the next few months.
Transnet plans to send a delegation to the Philippines at the end of this month to learn more about the operational aspect of the company.
“We were looking for company which would be able to invest and that is globally established.
“The other aspect is we look for specific efficiencies in the business. For example, if you have operational controls, what are the key performance measures? We were clear on the bids and the proposals they needed to submit.
“It was well-structured and an independent evaluation process. Multiple partners in a facility like this won’t work. When you want control, you also want accountability. We also did not limit any of the bidders to form a consortium or joint venture,” said Peters.
Union members in KwaZulu-Natal have opposed the move to privatize Transnet arguing that jobs and collective bargaining were under threat from public-private deals at Transnet.
The SA Transport and Allied Workers Union said Transnet was slowly being privatised under different guises such as “private-public partnership” or “leasing” to private companies.
Mhlabawandile Nxumalo, Satawu’s secretary for the rail sector in Durban, said Transnet was the second-biggest employer in the province after the municipalities, and its privatisation was a threat to jobs for generations to come.
“The only mine that we have in Durban is the sea, so once government, via Transnet, takes a decision to privatise, then generations will lose work and we will not have any other mine. Transnet is the biggest employer after the municipalities in KZN, but those jobs are not secured. We don’t know the future because the GCE, which is representing Transnet, has not taken the union into its confidence,” he said.