Harbour project horrible blunder
Finance Minister Nene should have ensured consultation before the BRICS Bank lent Transnet R2.5bn for Durban port expansion, write Desmond D’Sa and Patrick Bond
LAST week’s approval of a BRICS New Development Bank loan of $200 million (R2.5 billion) to expand the Durban container port occurred without the Sandton-based bankers doing adequate consultation or analysis.
This is not only unacceptable in a democratic society, especially for such an important and controversial project, it also makes a mockery of claims the Brazil-Russia-IndiaChina-South Africa ( BRICS) bloc acts differently from arrogant Washington bankers.
For decades, the South Durban Community Environmental Alliance (SDCEA), with members from all races and classes, has opposed the ultra- polluting, port- petrochemical complex. Container trucks are especially damaging, with one careening off Field’s Hill in 2012, killing two dozen kombi passengers – just one of an annual average 7 000 truck crashes in Durban.
SDCEA is opposed to the massive truck logistics park proposed for the Clairwood Racecourse, due to its threat to nearby schoolchildren’s safety.
Although concessions were belatedly won from Engen, BP and Shell on long-overdue sulphur scrubbing at the continent’s largest refinery complex, it was not long ago that Merebank’s Settlers Primary School had a 52% rate of asthma, the highest recorded at any school. Leukaemia is still a South Durban pandemic, with rates 24 times the national average.
Nevertheless, Transnet’s new R24bn pipeline anticipates doubling both refining and Durban-Johannesburg oil transport capacity.
Four multinational corporations – Italy’s ENI, Norway’s Statoil, ExxonMobil and Sasol – are doing exploratory oil and gas drilling 4km deep in the dangerous Agulhas current offshore of Durban.
This expansion is occurring not only when SDCEA demands a local fossil-fuel detox, but so does the world, due to the looming catastrophe of climate change. Evidence is growing ever more obvious, especially in damage to Transnet’s own Durban facilities during last October’s super-storm: a ship lost its moorings and blocked the harbour, and overboard containers let loose 49 tons of plastic nurdles, which continue to destroy marine life.
Transnet’s oil pipeline was originally budgeted at just R6bn. In addition to incompetence in mega-project design – as even then State Enterprises minister Malusi Gigaba confessed in 2013 – one reason for massive cost over-runs was the line’s re-routing from the white areas of Hillcrest and Kloof to South Durban’s black neigh- bourhoods. SDCEA is opposed to Transnet’s environmental racism.
Moreover, the UKZN Centre for Civil Society and Birdlife SA also challenged Transnet’s environmental impact assessments in 2012-14, due to historic climate denialism and the harbour’s ecological degradation, forcing further delays until Transnet reworked its proposal – but still not to the critics’ satisfaction. The likely collapse of the large sandbar near the container terminal will demolish vital bird and marine breeding grounds.
Revelations
In addition, ordinary citizens now care much more about Transnet malgovernance. Few were surprised at last weekend’s revelations: further fraud associated with chief executive Siyabonga Gama’s attempted R1bn illegal procurement contract with the German firm SAP, a confessed ally of the Guptas in other improper deals.
BRICS bankers may need reminding that Transnet got a loan of $5bn from the China Development Bank during the 2013 BRICS summit in Durban.
Gama and Transnet’s then chief executive Brian Molefe contracted Chinese stateowned Shanghai Zhenhua Heavy Industries to build the world’s most over-priced container cranes, which included pay-offs to the Gupta brothers’ empire. Also thanks to the loan, South China Rail supplied locomotives, but with 21% kickbacks to the Guptas worth more than $400m.
These sweet deals are economically irrational. “Blue economy” job creation promises don’t hold water here, for port expansion typically includes “4th Industrial Revolution” robotics; the new mega-ships that carry upwards of 10 000 containers now have fewer than 20 crew.
Durban is already one of the world’s most expensive ports for container handling, even before an expensive new foreign loan for overpriced infrastructure is factored in. Transnet also fails to consider rising world economic volatility – such as Donald Trump’s protectionism against SA steel, aluminium and car exports – and the general downturn in world trade (measured as a share of GDP since the 2007 peak).
For example, according to TradingEconomics.com, total South African imports had risen from 18% of GDP in 1994 to 37% of GDP in 2009, but then fell to 30% last year. This is a problem shared by all the BRICS, measured as both imports and exports as a share of GDP in 2017: Brazil dropped from its historic peak of 30% in 1994 to 25%; Russia from 68% in 2000 to 45%; India from 56% in 2012 to 40%; and China from 68% in 2006 to 38%; and South Africa from 72% in 2009 to 61%.
Perhaps unaware of these trends, the 2012 National Development Plan insisted on expanding the port-petrochemical complex all the way into the old airport – as a new “Dig Out Port” – and now needs a major rethink.
In 2016, when digging was meant to commence, Transnet was forced to announce a delay until 2032 due to flat shipping demand and sky-high costs.
Transnet’s dollar-denominated loan will add to South Africa’s potentially unrepayable foreign debt, which recently rose to more than 50% of GDP for the first time ever. Severe repayment pressures are expected by Treasury within a year. Indeed this loan – like the $3.75bn World Bank loan to fund the Medupi coal-fired power plant, which SDCEA led national opposition to in 2010 – should be declared “odious debt”, for which a more democratic future government will declare in “default” due to lender liability, corruption and poor planning.
Last week, Finance Minister Nhlanhla Nene became chairperson of the BRICS Bank. Will he be fair to poor and working people, and a responsible steward of our super-stressed environment? In 2014-15, the only year he has so far overseen the content of the Treasury’s budget, Nene cut spending on social programmes and climate change mitigation, and allowed rich South Africans to increase their annual capital flight from R4m to R10m.
On the other hand, Nene laudably fought against the R1.4 trillion Rosatom nuclear reactor deal in 2015, when that appeared imminent thanks to memorandums of understanding Jacob Zuma signed at the BRICS summit in Ufa that year. As a result, in December 2015 he was notoriously fired – supposedly to become the BRICS bank’s local branch manager. That position was only a figleaf, and never materialised.
Nene should very quickly come up to speed and learn why the Bank’s Africa Regional Centre in Sandton was slated by Auditor-General Kimi Makwetu on grounds of R2.5m in “fruitless and wasteful expenditure” last November.
The employees there failed to even bother checking Google, where they would have learned about ongoing SDCEA protests against Transnet.
Instead, BRICS bankers may be beholden to the BRICS Business Council, whose five South African members include Gama and Mediterranean Shipping Company director Sello Rasethaba.
SDCEA will be protesting this loan and other features of corruption, maldevelopment and climate change at the BRICS Business Council when it visits Durban, and also the BRICS heads of state when they go to Sandton in late July. Similar protests in 2013, when BRICS leaders were at the Luthuli International Convention Centre, apparently did not work – not even enough to get consultation on the $200m loan – so activists must redouble their efforts and society must be vigilant against ongoing residues of these Zupta-style mega-projects.
D’Sa is co-ordinator of the South Durban Community Environmental Alliance and a 2014 Goldman Environmental Award recipient. Bond teaches political economy at Wits School of Governance, is an honorary professor at UKZN’s School of Built Environment and Development Studies, and authored Politics of Climate Justice (2012) and Unsustainable South Africa (2002).