The selected bidder(s) for Pier 2 Durban and Ngqura Container Terminal will form a special purpose vehicle (SPV) with Transnet to upgrade and operate the facilities under 25 year contracts.

Previous efforts to issue port terminal concessions to private sector operators have been shelved as a result of opposition from South Africa’s trade unions movement, as well as large sections of the ruling African National Congress.

The SPV model appears to have been devised to overcome such opposition by ensuring that Transnet is still involved in operations. However, it remains unclear whether Transnet and the selected operator for each terminal will take equal stakes in the new SPVs.

Transnet “tested the water” on sector interest in its proposals last year and must be pleased with the level of interest. APM Terminals, DP World, COSCO and a joint venture of China Harbour Engineering Company and Guangzhou Port Company are among the 10 companies shortlisted for Pier 2. APM Terminals is among the four bidders on the shortlist to operate Ngqura in the Eastern Cape, although it is not clear whether Transnet will seek to avoid appointing the same partner for both contracts.

The other three interested parties on the Ngqura shortlist are joint ventures of Red Sea Gateway Terminal and MMC Port Holdings; Star Classic Investments and Abu Dhabi Ports; and Terminal Investment Ltd (MSC) and REMGRO. This is the latest indication that Abu Dhabi Ports is keen to build up its operations along the entire eastern coast of Africa, following hot on the heels of planned projects in Egypt and Sudan, plus August’s memorandum of understanding with Adani Ports to invest in rail and port projects in Tanzania.

Transnet has now issued a Request for Proposals, with each of the shortlisted companies required to provide more details of their plans by this December. The parastatal said that it was particularly keen to improve volumes at its newest port, Ngqura, which it concedes has been loss-making for a number of years.

Ngqura has installed capacity of 1.3M TEU/year and design capacity of 2M TEU/year, but is currently handling just 50,000 TEU/month. Pier 2 has capacity of 2.4M TEU/year, but the range of vessels it can serve is limited by its maximum draft of just 12.2m.

In a statement, Transnet said: “Partnering with global port terminal operators and shipping lines offers the opportunity to attract much needed investment, instil best practice management and enhanced technological capability to rapidly improve the performance and volume throughput.”

Meanwhile, wage negotiations between Transnet and the South African Transport and Allied Workers Union (SATAWU) and the United National Transport Union (UNTU) –  under way since May – have ended without an agreement being reached. As with all South African parastatals, Transnet’s finances are under pressure, but the unions are keen to secure substantial pay increases as a result of high cost of living increases.

Transnet says that it offered an increase of 1.5% on “all pensionable elements of remuneration,” which include basic salary, overtime and bonuses, although without any increase in medical aid subsidy and housing allowance. In addition, it offered to introduce “bespoke” productivity incentive schemes that could boost earnings by up to 16%.

It also agreed to redeploy and reskill employees who might be affected by the disappearance of their original positions. For its part, SATAWU has requested a 13.5% salary increase plus other additions, which Transnet says add sup to a 21% increase in labour costs.

In a statement, Transnet said its offer is reasonable and fair and takes into account it liquidity position, adding that the fact that its wage bill was 61% of operating expenditure in 2021 is “unsustainable”. It said that it is seeking to improve its operational and financial performance to ensure business sustainability.

The failure of talks to date suggests that strike action is a real possibility. However, a SATAWU spokesperson said: “SATAWU wants to emphasise that going on strike is not our priority; however, at this stage the employer is forcing us to go through that route.” Transnet said that it “remains committed to amicable wage negotiations.” The dispute has been referred to the Transnet Bargaining Council for resolution.