Private funding model for dig-out port under the microscope

As Transnet last week marked a major milestone in the establishment of the new R75-billion dig-out container port in Durban when it officially took ownership of the old Durban International Airport site from the Airports Company of SA, vociferous environmental objection continued to dog the project. The “critical milestones” in the Durban dig-out port (DDOP) development, said Mark Gregg-Macdonald, Transnet’s group executive for planning and monitoring, are the acquisition of the remaining properties on the site and the promulgation of the port (when cabinet approval is received) – expected to occur at the end of the second quarter of 2014. This will soon be followed by the completion of the private sector funding (known as the acronym PPP – or public/private partnership) in the middle of the third quarter, 2014. The cost of the port is not included as part of the R300-billion capital budget in the group’s market demand strategy (MDS), but, as maritime lawyer Andrew Pike revealed to FTW recently, is a separate funding issue currently being studied by a specialist team. Another milestone, which may prove considerably more sensitive than the others, is the environmental authorisation, which Gregg-Macdonald expects towards the end of the fourth quarter of 2015. But highlighting the sensitivity was Transnet public affairs manager, Mboniso Sigonyela. Speaking to FTW on the sidelines of the press briefing, he said that the meeting that had been held the previous day with Durban south basin community members had led to vociferous objections to the plans. The final of Gregg- Macdonald’s critical milestones is the completion of the construction of Phase 1 of the new port, which he flagged for the start of the fourth quarter of 2019. He also noted that demand for container capacity in Durban was expected to grow from the current 2.5 million TEUs a year, to more than 12m TEUs by 2040. “Container volumes have grown five-fold over the past 30 years,” he added, “and are forecast to grow again by five-fold over the next 30 years. “Durban will continue to handle 70% of the national total, and Transnet’s 30-year container forecast shows that the port’s container growth is expected to be 8% from 2010-2020, 6% from 20-30, and 4% from 30-40.” Another statistical calculation showed that the national container growth rate had averaged 2.5 times the gross domestic product (GDP) growth rate over the past decade. It is expected to slow, according to Gregg- Macdonald, but is still expected to be up to 1.5 times GDP. Along with other detailed statistical analyses, he added: “All that gives us a good guide to when we will need new infrastructure, and highlights that the new digout port is vital to keep up with these projections.” At the official handover ceremony, Malusi Gigaba, minister of public enterprises, said that after 2019, the growth in demand in Durban would have to be met by the new dig-out port. The national demand will be added to by expected increases at the nation’s other container ports. In Cape Town, according to Gigaba, Transnet is planning to grow the port capacity from 700 000 TEUs today to 2.5 million TEUs in thirty years. Meantime, the ports of Port Elizabeth and Ngqura combined will become a core transhipment hub, with a capacity of 6 million TEUs in 2042. “As these ports expand and cutting edge equipment is installed,” he added, “I am confident that productivity will reach the levels needed by mega-container vessels.” Minister of transport, Dikobe Ben Martins, pointed out the dimensions of the airport site. “This transaction,” he said, “involves the transfer of approximately 641 hectares of land, valued at R1.85 billion. Having concluded the first phase of the transaction between the two departments, the department of transport will promulgate the Durban dig-out port in terms of the Ports Act of 2005.” He also stressed the attention that was being paid to the environmental impact study. “As required by the law,” Martins said, “the department of transport will undertake necessary consultations with the affected communities and the general public, before the port is promulgated.” CAPTION Ben Martins...‘Transaction involves the transfer of approximately 641 hectares of land.’