Government weighs port concessioning options

Alan Peat ALTHOUGH THE Department of Transport is confident that the National Commercial Ports Policy will be gazetted next week, a contrary viewpoint was taken at a meeting of a parliamentary monitoring group in late June. This was held between representatives from government departments, organised labour, and parliament and has rather upset Sacob, which told FTW that any meetings which bear on the policy should include private sector stakeholders. At the meeting, the Department of Trade and Industry (DoT&I) made powerful representation for the second draft of the policy in which privatisation of port functions (termed "concessioning" by the authorities) is a primary foundation on which the ports' restructuring is built. A DoT&I representative noted that the logistics costs in Africa were the highest in the world. "Freight costs are 11% of the total cost of exports in South Africa," he said, "versus 5% in developed countries and 8% in developing countries. "Furthermore, Durban's port throughput lags in comparison with Hong Kong, and waiting time is over three times the expected norm." In its policy analysis, the DoT&I weighed two concessioning options. The first is to offer concessions to shipping lines. "However," said the spokesman, "the department feels that this option would lead to negative long-term consequences - such as alienating other shipping lines and allowing a monopoly to form." The DoT&I recommends that if concessions are to be made they should go to independent global operators. Although it accepts that this could also cause some negative results, the DoT&I feels the advantages outweigh the negatives and that these concessions could lead to more efficiently run ports. This was supported by Trade & Investment SA, whose representative asserted that the DoT&I has a good line of communication with the industry and that there really is a crisis when it comes to moving goods. He stated that concessioning a port was no different from a toll road where a private company runs the road on behalf of the government, but the government still owns the road. "In a way," he added, "concessioning offers the best of both worlds: the government regulates and makes policy and the private sector focuses on efficiency." But the joint parliamentary committees at the meeting asked the presenters and representatives of the DoT&I and the Department of Public Enterprise to clarify several issues. "Most of the focus considered the lack of information passing between committees and departments," said the minutes of the meeting. "However, the joint committees' main concern focused on the government's analysis of the problem and the government's proposed solution. Most importantly, are concessions really necessary? And will granting concessions really fix anything?" This was supported by the union spokesman Randall Howard who represented the SA Transport and Allied Workers Union (SATAWU). He expressed his frustration and disappointment that organised labour was only involved or consulted in this process after the Minister of Transport had announced that concessions would be made on a pilot level. He believed that restructuring was necessary. "However," he said, "we believe that privatising and selling out to big business is not necessary. SATAWU would like to see the government take a more active role in the ports and we believe that the ports should be publicly controlled." This still left doubt about the current form of the policy in the minds of the joint committees. They therefore recommended that further discussions take place. These to inform the committees of the opinions of the executive departments, organised labour, and private stakeholders concerning port policy and, in particular, concessioning. Concluding the meeting, the representatives from the government departments, organised labour, and parliament agreed that further engagement on these issues was necessary. "Specifically, the chairs believed that a debate on concessions must take place in a public forum. The committees can look at the pilot project announced by the Minister, and they can allow the departments to make further presentations."A