On the 1st of March 2024, Transnet announced that its Board of Directors approved the selection of ICTSI of the Philippines as the preferred bidder to develop and upgrade DCT Pier 2 in Durban in a 25-year joint venture with Transnet Port Terminals (TPT) expected to positively impact Transnet’s container operations and the competitiveness of South Africa’s economy.
This approval and selection seems to have hit a speedbump in the form of an interdict filed by APM Terminals, a division of A.P. Moller-Maersk, at the Durban High Court to prevent ICTSI from assuming its role as the manager of DCT Pier 2.
It is understood that APM Terminals was an unsuccessful bidder for the 25-year contract and due to the urgency of the matter, filed a judicial review application in the High Court in Durban seeking
- interim interdictory relief, and
- a review of the constitutionality and lawfulness of the tender award to ICTSI
As per News 24, “the court challenge could delay the commencement of ICTSI’s operation, which Transnet had hoped would begin in the next two months.”
Transnet, the beleaguered State Owned Enterprise of South Africa in charge of running and operating several ports and terminals across South Africa has been plagued by operational inefficiencies.
These inefficiencies have hamstrung key sectors of South Africa’s economy, including commodity exports, manufacturing, and retail, leading to the World Bank ranking the ports of Ngqura, Durban, and Cape Town at 338, 341, and 344 respectively out of 348 ports for efficiency in their Container Port Performance Index 2022.
Transnet recently received a significant R47 billion bailout from the South African government with stakeholders and industry observers cautiously assessing this latest development on the back of skepticism rooted in Transnet’s long-standing issues with these operational inefficiencies.
DCT Pier 2 handles 72% of the Port of Durban’s throughput and 46% of South Africa’s container traffic.
Impact on port operations and investment
While this legal challenge could potentially delay the commencement of ICTSI’s operations, investors are closely watching the case to gauge South Africa’s commitment to private sector participation in public infrastructure projects.
Any private partner is expected to make substantial investments in the port, addressing issues such as equipment shortages and maintenance backlogs that have affected port performance.
The citrus industry, among others, views the legal challenge as potentially delaying their plans to utilize the privately run container terminal from Durban for exports.
Some industry sources speculate that the legal challenge reflects attempts by unsuccessful bidders to regain a competitive edge in South Africa’s port privatization projects.
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