Surprises in port privatisation debate

The classic debate on the subject of port privatisation versus performance came up again at the African Ports Evolution Conference held earlier this month. Now this theme has been a recurrent topic of many a discussion amongst members of the freight industry, and the general consensus has almost always found in favour of port privatisation. The bureaucratic nature of a state-owned enterprise; lack of innovative management; no apparent drive to achieve customerfriendly service; low levels of efficiency; and a complete lack of competition in a monopolistic environment have all been criticisms levelled at the present SA ports structure. But in this latest debate – conducted by Fernando Couto, CEO of Portos do Norte, Mozambique; Mothusi Lukhele, MD of transport services at Accenture, SA; Marco Pluijm, ports sector manager of Bechtel of the US; and Karl Socikwa, CEO of SA’s Transnet Port Terminals (TPT) – the end result was a surprising three-to-one in favour of state-owned port facilities. It was, said debate chairman, Thato Tsautse, CEO of the Ethekwini Maritime Cluster, a topic that has a way of appearing on a regular basis. Government’s original plan, she said, was to design terminals for privatisation. An idea that FTW remembered was a strong policy theme when Alec Irwin was minister of trade and industry. “But, by 2014, those privatisation plans had been put aside,” she added – before handing over the f loor to Fernando Couto. “Mozambique in 2000 was one of the poorest countries in the world,” he said, while also suggesting that the money just wasn’t there for the country to develop an effective port structure on its own. “Although oil and coal discoveries have helped, we are still poor in global terms. And the IMF and the World Bank insisted that the financing of the Mozambique budget was based on the privatisation of the ports.” The success of this scheme, according to Couto, is self-apparent. “The numbers speak for themselves,” he said, pointing to the fact that the Port of Maputo handled 2.5-3 million tonnes of cargo in 2000. Now, in 2014, that tonnage has increased to 14mt. “The involvement of the private sector in Mozambique is a very good story,” he added. “Volumes, income, government revenue all benefit. “I give a plus for privatesector involvement.” Karl Socikwa, meantime, begged to differ. “I have to agree to some extent with Fernando,” he said. “There are some places around the world where private-sector involvement has higher efficiency. Some not so. “What we’ve seen in SA is failed cases of privatisation. You must look at it on a case-for-case basis. “The Airports Company SA (Acsa), for example, looked at private-sector involvement. But, when they needed investment in airports for the World Cup, the private sector was not up to the challenge. “In the telecommunications sector there was private involvement in Telkom. But that was an exercise that benefited shareholders in private companies rather than the development of the communications infrastructure. “There is provision in the National Ports Act that all future port operations could be opened up so any entity can approach Transnet National Ports Authority (TNPA) for a terminal licence. “We’ve had terminals by the likes of Grindrod and Bidvest apply. “It’s sometimes better, sometimes not.” Mothusi Lukhele concentrated on the elements of national security and transformation. “A port terminal is a strategic national asset,” he said. “But it’s supposed to do more than just move goods in and out of the country. “Private-sector operations do not fulfil the social mandate. Transnet, however, is doing a lot for all the players.” Dutchman Marco Pluijm was a surprise package. He came out very strongly against the concept of privatisation. “You need to be very careful,” he said, “because ports are strategic for the whole country. “What we see is that, where ports have been privatised, it’s very difficult for them to expand for the future (good) of the country. You need to be very careful upfront as a port landlord that you have control of everything. “Full privatisation, in my opinion, never works.” INSERT & CAPTION What we’ve seen in SA is failed cases of privatisation. – Karl Socikwa