Transnet National Ports Authority

TRANSNET N AT I O N A L P O R T S AUTHORITY

TRANSNET NATIONAL PORTS AUTHORITY

Harnessing the

Ocean’s Vast Riches PRODUCTION: Timothy Reeder

Transnet National Ports Authority (TNPA) represents one of the five operating divisions that comprise the Transnet SOC Ltd colossus. It is responsible for the safe, effective and efficient economic functioning of the national port system, providing infrastructure and marine services at South Africa’s eight renowned commercial seaports.

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The remit of Transnet National Ports Authority is broad and complex, and encompasses the planning, provision, maintenance and improvement of port infrastructure at all South African ports. Its service offering targets primarily port users, among whom can be found terminal operators, shipping lines, ship agents and cargo owners. In this way, it manages the eight commercial seaports along South Africa’s coastline: Richards Bay, Durban, East London, Ngqura, Port Elizabeth, Mossel Bay, Cape Town and Saldanha.

TNPA performs its ‘landlord role’ as one of the five operating divisions at the core of Transnet, the largest and most crucial part of the freight logistics chain that ensures delivery across South Africa and strives to provide integrated, efficient, safe, reliable and cost-effective

services to promote economic growth in South Africa. Every day Transnet delivers thousands of tons of goods around South Africa, through its network and, perhaps most regularly, both to and from its ports, with this cargo then moved onto ships for export while goods are unloaded from overseas.

Transnet’s annual results for the year ending 31 March 2017 were released in July, and helped to illustrate the strength of the organisation as a whole. CEO Siyabonga Gama spoke of the increase in revenue seen over the period, by 5.3% to R65.5 billion, alongside rises in general freight business and EBITDA by 4.9% and 5% respectively. Another of Transnet’s vital five cogs is its Port Terminals (TPT) arm, whose newly appointed Chief Executive Nozipho Sithole describes its own current situation in similar terms.

“It does feel like everything is going well,” she states. “The economy is doing better and we are seeing some good results. We are now focussing very hard on the customer service offering and everything is working very well.”

Also in July, TNPA announced a significant personnel change of its own, with Ms Shulami Qalinge succeeding Mr Richard Vallihu as Chief Executive (CE) and thus becoming the first ever female CE of the organisation. TNPA described how, “the appointment is of significance for an organisation that prides itself on its advancement of women in the male dominated Maritime Industry.

“50% of TNPA’s executive committee is made up of females, while women can be found across the organisation in Operational roles previously reserved for men.”

Qalinge is tasked with providing

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TRANSNET

strategic direction and leadership in the implementation of TNPA’s strategic objectives and operational targets, as well as total oversight of the operation of its eight commercial ports accountable for more than 3500 employees. Shortly after this appointment, the company revealed that the Port of Cape Town’s new fuel storage facility, operated by blackempowered Burgan Cape Terminals, had become fully operational, with the terminal having received its pilot consignment of diesel aboard the tanker Marlin Ammolite in the first week of July 2017.

BURGAN “We are very proud that the Burgan Cape facility was officially opened on 29 August 2017,” Qalinge says of the inauguration. “The facility is an example of TNPA’s mandate to create port capacity to meet demand and to enable private sector investment in our ports.

More importantly, the facility increases black ownership in port operations, with a 30% shareholding and ownership. The capacity of approximately 118,000 cm3

will create opportunities to increase liquid bulk imports and contribute to security of supply for the Western Cape and domestic market.”

The benefits of the new facility were evident even before its opening, according to Qalinge. “There was also significant impact on the local economy,” she continues, “which is one of the criteria that we insist on when port facilities are created. This project injected R870 m into the local economy, and created jobs with construction on the site varying from about 50 personnel at inception to about 450 at the end. South African contractors performed all civil works during construction and 23 permanent jobs were created at the facility.”

The fuel storage and distribution facility is spread over approximately 37,273 m2 of land at the port’s Eastern Mole, and is set to help secure fuel supply in the region. Construction began in late 2015 after TNPA awarded Burgan Cape Terminals a 24-year lease to develop a new independent fuel storage, distribution and loading facility. Of the award, Cape Town Port Manager Mpumi Dweba-Kwetana commented: “With an estimated investment of R890 million, the awarding of this contract to a 30% black owned company in partnership with an international operator speaks strongly to Transnet’s commitment to the Market Demand Strategy (MDS) and the vision of the Operation Phakisa programme of creating capacity ahead of demand and unlocking South Africa’s ocean economy.”

Widely known for its picturesque beaches, as well as a coastline stretching across more than 2,500 km surrounded by waters from both the Indian and Atlantic oceans, the potential for South Africa’s ocean economy is without doubt enormous. Aside from tourism, South Africa has, in recent years, identified four priority areas for development, namely: marine transport and manufacturing, offshore oil and gas exploration, aquaculture as well as marine protection services and ocean governance, under

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the Operation Phakisa heading.

Three years ago, the South African Government announced its intention to implement ocean economy projects which it expected to bear fruit to the tune of more than R20 billion in contributions to the country’s Gross Domestic Product (GDP) by 2019. “Going forward, delivery units have been established in the lead departments to drive the implementation of the detailed delivery plans. We will achieve the growth and the jobs we need in the economy,” President Jacob Zuma said at the time.

These ambitious projects, geared toward unlocking the country’s ocean economy has resulted in investments worth R24.6 billion and created more than 6,500 jobs‚ President Zuma announced in October. Zuma said the largest contribution to the total investment in the oceans economy came from infrastructure development, while it was revealed that the government had also contributed R15 billion. “From our own analysis‚ the total ocean sector contributes approximately 4.4% to South Africa’s GDP‚ with the largest contribution coming from the value chains‚” said Zuma.

OPERATION PHAKISA For a company like TNPA, such a central focus on harnessing the potential of the ocean looks set to have an enormous impact on its fortunes moving forward. “TNPA is at the forefront of Operation Phakisa,” states Qalinge, “as an implementing agency for port facility upgrades as well as introducing new port facilities in order to grow the marine manufacturing sector. We are also funding and upgrading all existing TNPAowned Ship Repair facilities in order to better serve and grow the ship repair market. The refurbishment programme, which commenced in 2014, will ramp up to 2019. This will also improve the positioning of these facilities for future private sector involvement.”

It will look to broaden the scope of its service offering through the initiative too, as Qalinge explains that,

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“through Operation Phakisa, TNPA is seeking private sector investment on a concession basis for new facilities at three ports. These include the establishment of an Offshore Oil and Gas Support Hub at the Port of Saldanha Bay defined by three proposed new projects in rig repair and offshore support, a new Floating Dock for the Port of Richards Bay and Boat Building Cluster at the Port of East London.

These initiatives are being progressed with regard to the prevailing economic conditions and investor appetite.”

Qalinge also describes the trying times sparked by an ever-unsure economy, and such initiatives could not be more welcome in helping TNPA to continue to see growth in its business. “Volume performance of the organisation was reflective of the slowing economy.” she begins, “and the downward revision of volume forecasts by customers and credit rating downgrades of the sovereign banks necessitated a revision of our Market Demand Strategy Capex programme.

With Transnet being a catalyst for economic growth, especially with its infrastructure investment focus, this revision certainly had a knock-on effect on the economy.”

There is, however, light at the end of this particular tunnel. “Recent performance statistics give us a sense of optimism that the next twelve months will see elements of recovery,” Qalinge continues. “Our performance over the past five months of our current financial year 2017/18 does point to some green shoots, especially with commodity prices on international markets stabilising, albeit at much lower levels than those experienced prior to the global economic slowdown.

“Transnet is optimistic that the economy appears to be in recovery, evidenced by the volume performance of the cargoes we handle. However, as a responsible entity we remain cautious in terms of costs and timing of investments.”

NEW TUGS Another key player in the bid to unlock the riches held within South Africa’s waters is South African Shipyards, an empowerment-centric organisation which occupies 11 hectares of prime industrial ground in the Port of Durban Bay and has useable water frontage of almost 300 metres. TNPA selected it as a partner to help fulfil its R1.4 billion, nine-tug construction contract at its KwaZulu-Natal ports, a project which has moved with considerable speed from the outset.

Back in September 2016, TNPA Chief Operating Officer, Phyllis Difeto, remarked that, “The work by Durban ship builder, Southern African Shipyards, on this project has helped to cement the marine ship building and support industry locally. Having a local manufacturer also promises excellent after-sales support for the 35year service life of these vessels. Local ship building expertise is exactly what the government’s Operation Phakisa initiatives aim to leverage in unlocking the potential of the Ocean Economy.”

The order entails the construction of nine new tugs, to be built over three and a half years, as part of a wider fleet replacement programme that covers not only tugs but new dredging vessels and new marine aviation helicopters.

In August, the sixth and seventh of these vessels were successfully delivered, edging TNPA closer to the completion of this significant undertaking. “We are particularly proud of the Tug Build Programme and the partnership with Southern African Shipyards (SAS),” says Qalinge.

“SAS was awarded the largest single contract for the building of harbour craft ever issued by Transnet with an approximate value of R1.4bn. We are particularly pleased with the high quality of manufacturing being produced at the shipyard, and the newly launched tug ‘Usiba’ will be delivered to the Port of Richards Bay in November 2017.” Through this project TNPA and SAS have created

TRANSNET

500 direct and 3500 indirect jobs, together with a minimum of 60% locally manufactured components.

A public celebration of all things maritime, the two-day Durban Port Festival, again used Southern Africa’s busiest commercial port to showcase portside fun for all ages, as part of TNPA’s efforts to bring communities closer to their ports. “The Durban Port Festival was once a regular event attracting thousands of visitors until the advent of the ISPS (International Ship and Port Security) code of safety for Ports in 2004,” Qalinge explains. “This is the second Durban Port Festival after the ban was lifted and it has grown substantially. We are proud to share that the number of people who visited the port during the event has doubled from 8000 in 2016 to about 17,000 this year.”

Durban Port Manager, Moshe Motlohi, added: “We reintroduced the Durban Port Festival in 2016 and it was a great success. This is a rare chance to learn more about the Port of Durban and we hope to demonstrate to the public some of the opportunities available in this sector.” TNPA is actively developing what it calls ‘Smart People’s Ports’ that are people friendly and have a focus on community engagement, tourism, leisure, recreation, and career and business opportunities. It is designed to be not only a celebration of marine and maritime identity, but also a further highlighting of the importance of the Oceans Economy, a vital catalyst for job creation and economic growth.

Qalinge concludes by outlining some of the key areas which to not only consolidate TNPA’s existing market position, but also push it to even greater heights. These are exciting times for South Africa’s maritime sector, and the company is ready to play an integral part. “We have a capital budget of R1,768m for the 2017/18 financial year, and there are a number of key projects included in our 2017/18 budget to create and maintain port infrastructure,” she lays out.

“Some of the bigger projects are

investments in refurbishing ship repair facilities as a major contributor to deliver on Operation Phakisa, which have an estimated budget of R156m for 2017/18. We will continue to oversee the tug replacement programme, and acquire new dredgers to expand our dredging capacity and to replace an ageing fleet. We will also undertake berth deepening and lengthening at the container terminal at the Port of Durban to increase the berth depth from 12.8m to 16.5m, and ensure that the Port of Durban can handle super post panama vessels with drafts of up to 14.5m.”

With coastal goods and services alone estimated to contribute over a third to South Africa’s GDP, TNPA is taking all the right steps to ensure that it is key player in the unlocking of its potential.

TRANSNET +27 11 351 9001 transnet@tip-offs.com transnetnationalportsauthority.net

SHULAMI QALINGE

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Issue No.64

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ENTERPRISE AFRICA

OCTOBER 2017