Transnet SOC (Transnet) announced that the process of choosing an equity partner for its flagship Durban Container Terminal (DCT) Pier 2 has been completed.
Transnet has chosen International Container Terminal Services Inc. (ICTSI) as the Preferred Bidder for the 25-year joint venture to build and modernise the terminal alongside Transnet Port Terminals (TPT).
Transnet’s largest container facility, DCT Pier 2, handles 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic.
“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port. We are delighted to have a global player of ICTSI’s standing on board to drive this process,” stated Portia Derby, CEO of Transnet Group.
The procedure is completed after government approvals under the Public Finance Management Act (PFMA).
“The collaboration with ICTSI will assist in repositioning the terminal for best practice performance, assuring an increase in volume throughput, and assisting the terminal in providing operational and commercial assistance to access global shipping line call routes,” said Transnet in a statement.
Transnet’s current capacity of 2 million TEUs will be increased to 2.8 million TEUs as part of a growth strategy.
This is consistent with Transnet National Ports Authority’s (TNPA) plans to raise the Port of Durban’s existing container capacity from 3.3 million TEUs to 11.4 million TEUs.
According to the statement, a new company will be formed to manage the operations at DCT Pier 2, in which Transnet will have majority ownership of 50% plus one share. The term of the transaction is 25 years, with an option to extend to a maximum of 30 years.
Transnet noted that non-current assets will be transferred into the new company, together with customer and supplier contracts, while the terminal operating licence and lease will be subcontracted to the new company, after seeking approval from Transnet National Ports Authority.
Moreover, DCT Pier 2 employees will be seconded to the new entity, there will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of ICTSI, according to the statement.