Odi­ous Brics loan for Dur­ban port project will not go un­op­posed

Be­sides be­ing a threat to the en­vi­ron­ment, the ex­pan­sion is costly and risks be­com­ing a white ele­phant

Business Day - - OPINION - Des­mond D’Sa and Pa­trick Bond ● D’Sa is co-or­di­na­tor of the South Dur­ban Com­mu­nity En­vi­ron­men­tal Al­liance; Bond teaches po­lit­i­cal econ­omy at Wits School of Gov­er­nance.

The ap­proval last week of a $200m loan from the Brics New De­vel­op­ment Bank to ex­pand the Dur­ban con­tainer port hap­pened with­out the Sand­ton-based bankers con­duct­ing ad­e­quate con­sul­ta­tion or anal­y­sis. This is un­ac­cept­able in a demo­cratic so­ci­ety, es­pe­cially for such an im­por­tant and con­tro­ver­sial project.

It also makes a mock­ery of claims the Brazil, Rus­sia, In­dia, China and SA bloc acts dif­fer­ently from ar­ro­gant Wash­ing­ton bankers.

For decades, the South Dur­ban Com­mu­nity En­vi­ron­men­tal Al­liance, which has mem­bers from all races and classes, op­posed the pol­lut­ing port-petro­chem­i­cal com­plex. Con­tainer trucks are es­pe­cially dam­ag­ing, with one ca­reer­ing off Field’s Hill in 2012, killing two dozen kombi pas­sen­gers — one of an an­nual av­er­age of 7,000 truck crashes in Dur­ban. The al­liance is op­posed to the mas­sive truck lo­gis­tics park pro­posed for the Clair­wood Race­course due to its safety threat to nearby school­child­ren.

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 a school. Leukaemia rates in South Dur­ban are 24 times the na­tional av­er­age.

Nev­er­the­less, Transnet’s new R24bn pipe­line an­tic­i­pates dou­bling the re­fin­ing rates and in­creas­ing the oil trans­port ca­pac­ity be­tween Dur­ban and Jo­han­nes­burg. Italy’s ENI, Nor­way’s Sta­toil, ExxonMo­bil and Sa­sol are do­ing ex­ploratory oil and gas drilling 4km deep in the dan­ger­ous Agul­has cur­rent off­shore Dur­ban.

This ex­pan­sion is oc­cur­ring when the South Dur­ban Com­mu­nity En­vi­ron­men­tal Al­liance is de­mand­ing a lo­cal fos­sil-fuel detox, as are many other or­gan­i­sa­tions across the world, due to the loom­ing catas­tro­phe of cli­mate change. The ev­i­dence is grow­ing ever more ob­vi­ous: dur­ing Oc­to­ber 2017’s su­per-storm, a ship lost its moor­ings and blocked the Dur­ban har­bour. The con­tain­ers that tum­bled over­board spilled 49 tonnes of plas­tic nur­dles that con­tinue to de­stroy marine life.

Transnet’s oil pipe­line was orig­i­nally bud­geted at R6bn. In ad­di­tion to in­com­pe­tence in megapro­ject de­sign — as even for­mer pub­lic en­ter­prises min­is­ter Malusi Gi­gaba con­fessed in 2013 — one rea­son for the mas­sive cost over­runs was the line’s rerout­ing from the mostly white ar­eas of Hill­crest and Kloof to South Dur­ban’s black neigh­bour­hoods. The al­liance is op­posed to Transnet’s en­vi­ron­men­tal racism.

More­over, the Univer­sity of KwaZulu-Natal’s 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.

Cit­i­zens now care much more about Transnet’s poor gov­er­nance. Few were sur­prised by in­for­ma­tion in the me­dia about al­leged fraud as­so­ci­ated with Transnet CEO Siyabonga Gama’s at­tempted R1bn il­le­gal pro­cure­ment con­tract with the Ger­man firm SAP, a con­fessed ally of the Gupta fam­ily in other im­proper deals.

Brics bankers may need re­mind­ing that Transnet re­ceived a loan of $5bn from the China De­vel­op­ment Bank dur­ing the 2013 Brics sum­mit in Dur­ban. Gama and Transnet’s then CEO, Brian Molefe, con­tracted Chi­nese state-owned Shang­hai Zhen­hua Heavy In­dus­tries to build the world’s most over­priced con­tainer cranes, which in­cluded pay-offs to the Gupta broth­ers’ em­pire.

Be­cause of 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 be­cause port ex­pan­sion typ­i­cally in­cludes fourth 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 Pres­i­dent Don­ald Trump’s pro­tec­tion­ism against South African steel, alu­minium and car ex­ports, and the gen­eral down­turn in world trade (mea­sured as a share of GDP since the 2007 peak).

To­tal South African im­ports had risen from 18% of GDP in 1994 to 37% of GDP in 2009, but then fell to 30% in 2017. This is a prob­lem shared by all the Brics coun­tries. 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%, China from 68% in 2006 to 38% and SA from 72% in 2009 to 61%.

Two other re­veal­ing in­di­ca­tors that move in tan­dem are the global com­mod­ity price in­dex — though of more rel­e­vance to Richards Bay and Sal­danha than Dur­ban — and the Baltic Dry In­dex, the best in­di­ca­tor of world ship­ping’s health. The S&P com­mod­ity price in­dex reached 5,900 in 2008 be­fore fall­ing to the 1,500-2,000 range since 2015. The ship­ping in­dex fell even fur­ther, from 11,500 in 2008 to be­low 1,500 since 2014.

The 2012 Na­tional De­vel­op­ment Plan in­sisted on ex­pand­ing the port-petro­chem­i­cal com­plex all the way into the old air­port, as a new “dug-out port”. Re­al­ity in­ter­vened in 2016, when 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 SA’s po­ten­tially un­re­payable for­eign debt, which re­cently rose to more than 50% of GDP for the first time. Se­vere repayment pres­sures are ex­pected by Trea­sury within a year. This loan — like the $3.75bn World Bank loan to fund the Medupi coal­fired power plant, to which the South Dur­ban Com­mu­nity En­vi­ron­men­tal Al­liance led na­tional op­po­si­tion in 2010 — should be de­clared “odi­ous debt” that a more demo­cratic fu­ture gov­ern­ment will de­clare to be in de­fault due to lender li­a­bil­ity, cor­rup­tion and poor plan­ning.

Last week, Fi­nance Min­is­ter Nh­lanhla Nene be­came chair­man of the Brics Bank. Nene laud­ably fought the R1.4-tril­lion Rosatom nu­clear re­ac­tor deal in 2015, when it ap­peared im­mi­nent due to mem­o­ran­dums of un­der­stand­ing signed by Ja­cob Zuma at the Brics sum­mit that year. As a re­sult, Nene was fired in De­cem­ber 2015 — sup­pos­edly so he could be­come the Brics bank’s lo­cal branch man­ager.

Nene should ed­u­cate him­self on why the bank’s Africa regional cen­tre in Sand­ton was slated in Novem­ber 2017 by Au­di­tor-Gen­eral Kimi Mak­wetu on grounds of R2.5m in “fruit­less and waste­ful ex­pen­di­ture”.

The Brics bankers may be be­holden to the Brics Busi­ness Coun­cil, whose five South African mem­bers in­clude Gama and Mediter­ranean Ship­ping Com­pany di­rec­tor Sello Rasethaba.

The South Dur­ban Com­mu­nity En­vi­ron­men­tal Al­liance will be protest­ing against this loan and other fea­tures of cor­rup­tion, malde­vel­op­ment and cli­mate change at the Brics Busi­ness Coun­cil when it comes to Dur­ban and at the Brics heads of state meet­ing in Sand­ton in July. Sim­i­lar protests in 2013 ev­i­dently 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.

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