Rising building costs could double terminal expansion estimate

RAY SMUTS WITH STEEP hikes in building costs inevitable as South Africa prepares to put massive infrastructure in place for the 2010 Soccer World Cup, Cape Town’s proposed extended container terminal could come in at almost double the original estimate. What is more, the project could be delayed for as long as ten months following the recent appointment by Transnet of two consultants. One will probe the feasibility of an inland container terminal (rather than the 300-metre extension out to sea) as proposed by the opposing faction, while the other will investigate lingering environmental concerns. NPA port manager Sanjay Govan does not believe an inland terminal is a truly viable option from an operational and cost point of view. Three sites, Belcon at Belville, Culemborg near the port (both Transnet-owned), and the old Paarden Eiland power station (owned by NPA) are in the framework. A report is expected from the consultant within two months. “The other major issue, hence the second consultant, involves the scientific method in which the CSIR measured the coastal erosion, as the scientific model does not actually display beach, land and sea,” said Govan. “The erosion therefore cannot be as accurate as the studies suggest.” This second report, which needs to be verified by internationally recognised consultants, could take as long as eight months after which the minister requires a further two months to come up with his Record of Decision. “That means we are talking April 2007, as a worst case scenario, which is putting us back a whole 20 months.” Govan says the original 2004/05 estimate for the extension, designed to increase stack space from around 700 000TEUs to 1 500TEUs a year, was close to R2.4 billion. “The cost of building materials has increased so much with all that World Cup infrastructure having to be built that by the time we get underway I would say our costs could run to R4.5 billion or even R5 billion.” Transnet has built in a projection of R3.9 billion for the project. The Cape Town container terminal is one of Transnet’s seven so-called ‘Capital Projects’, others covering Richards Bay, the Saldanha iron ore rail link capacity increase, and several in Durban. Govan is emphatic on one point: “We do not want to go back to the minister without crossing all the t’s and dotting all the i’s as we have learnt an expensive lesson on our previous submission.”