Ports authority now an independent subsidiary of Transnet

Investment in port infrastructure on the cards, says Ramaphosa

Amanda Khoza Presidency reporter
The change means that revenues generated by ports can be invested in port infrastructure, says President Cyril Ramaphosa. File photo.
The change means that revenues generated by ports can be invested in port infrastructure, says President Cyril Ramaphosa. File photo.
Image: GCIS

In a bid to reposition the economy, President Cyril Ramaphosa has announced the establishment of the National Ports Authority as an independent subsidiary of Transnet.

This is in line with the National Ports Act of 2005, he said on Tuesday.

“This is part of government’s ongoing effort to reposition and transform state-owned enterprises so that they can be profitable, sustainable and competitive and can play a developmental role in our economy,” said Ramaphosa.

Speaking during a media briefing while visiting the Cape Town port, Ramaphosa said the subsidiary would have its own board, which will be appointed by minister of public enterprises Pravin Gordhan.

Gordhan is expected to appoint an interim board by June 30 to oversee the establishment of the new subsidiary.

“This is a significant development because this reform has been delayed for more than 15 years, since the National Ports Act was promulgated. As part of our economic reconstruction and recovery plan, we are making progress in overcoming long-standing obstacles and bringing an end to delays in the implementation of reforms,” said Ramaphosa.

“An essential part of addressing the challenges in our ports is to create a clear separation between the roles of the infrastructure owner, which is the Transnet National Ports Authority, and the terminal operator, which is Transnet Port Terminals.”

He said the functional and legal separation of these roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency.

“In particular, it will mean that revenues generated by the ports can be invested in port infrastructure, both for the replacement of old equipment and for the upgrading and expansion of our ports.

“The creation of a separate subsidiary will allow the ports authority to make its own investment decisions and will ensure that it treats all terminal operators fairly and equally in the interests of port users.”

At the same time, Ramaphosa said, “Transnet will remain the sole shareholder of the subsidiary to prevent any negative impact on the group’s balance sheet, and to ensure that the ports authority remains an important part of the Transnet group.”

He said this reform will have a direct impact on port users and our export industries.

“They will benefit from increased efficiency, lower costs and new investment in port infrastructure. It will also have an impact on the lives of ordinary South Africans, who will benefit from lower prices of goods and more jobs throughout the export value chain.”

Ramaphosa said almost every product purchased in SA is affected in one way or another by the ports.

He noted that the performance of the country’s ports has declined in recent years, in comparison with other ports on the continent and around the world.

“This has had a significant impact on our exports, rendering SA products less competitive and increasing the cost of goods for every South African. We have set out to reverse this decline in performance and to position our ports as world-class facilities that can enable economic growth.”

He said the Cape Town port is strategically located on one of the busiest international shipping routes and is SA's second-largest container port by volume.

“It is particularly important for the export of our fresh fruit and wine. If the port functions efficiently, the economy of the Western Cape and indeed the entire country benefits. If port services are inefficient and costly or if imports and exports are delayed, the economy suffers.”

Ramaphosa said Transnet has put in place an ambitious plan to invest R100bn over the next five years in upgrading its infrastructure across the ports system.

He said achieving this target will rely on leveraging private capital to shore up the contributions of the state and establish world-class infrastructure at our ports.

“I wish to make it clear that state ownership of the ports remains our policy and we will not compromise on it. All of our ports, as well as our rail infrastructure, are strategic national assets that belong to the people of SA.”

The National Ports Authority and its assets will remain the ownership of the state, he said.

“Where the private sector can and should play a role is in partnering with the state to improve terminal operations and to invest in new infrastructure, as is already the case in several of our bulk cargo terminals.”

Ramaphosa also assured the nation: “There will be no jobs lost as a result of the creation of the new subsidiary; only greater efficiency and more investment.”

He said Transnet would continue with its work to improve operational performance by introducing new technology, maintaining and replacing old equipment, upskilling its workforce and ensuring that it has the right expertise in place.

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