South Africa Approves Move to Set Up Independent Port Authority
The South African government is continuing efforts to move forward with its pledge to improve the operations of its beleaguered commercial ports. The cabinet last week approved a measure that sets the stage for separating the administration of the country’s eight commercial ports into a stand-alone government-owned company.
The vote approved a plan to begin exploring the structure for the stand-alone company. While it still requires further development, it is part of a program of reforms for the country’s ports. Currently, the government-owned Transnet Group is responsible for port administration as well as the operation of terminals.
The cabinet approved separating the Transnet National Ports Authority into an independent company. It also provided a provision that would permit the stand-alone company to bring in a minority investor from among South Africa’s development finance institutions. Reports point out that this could provide critical financing for additional modernization of the operation and administration of the ports, while the government has committed to maintaining current employment.
The government said Transnet Group, which manages the ports, rails, and pipelines in South Africa, would be compensated but also gain a greater focus on its operations. The government has indicated in the past it would be open to having competing operators in the ports, and it has also pushed Transnet to privatize operations.
Transnet has already entered into a long-term concession with Philippines-based International Container Terminal Services (ICTS) for the operation of the Durban Container Terminal. It has also launched tenders for other key terminals, including in the Port of Ngqura and Cape Town.
The government says the reforms are working to improve the reliability, efficiency, and competitiveness of South Africa’s freight operations and supply chain. Critics, however, called the move to create a stand-alone company “largely cosmetic,” saying it does not get at the underlying issues that have plagued the port operations for years.
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South Africa’s ports have been consistently at the bottom of the league tables on rankings such as efficiency. There have been frequent backlogs and delays at the ports blamed on inefficiency, bureaucracy, lack of investment, and staffing shortages.
Proponents of the plan said it will permit each of the operations to increase their focus. They also point out that an independent port authority is the accepted best practice in Europe and countries around the world.
