New ports authority could herald more jobs and lower goods prices, says Ramaphosa
SOUTH Africans are set to benefit from lower prices of goods and more jobs throughout the export value chain following the establishment of the Transnet National Ports Authority as an independent subsidiary of Transnet.
This is according to President Cyril Ramaphosa, who described the move as a major step forward in the government's reform agenda.
Ramaphosa said the creation of a separate subsidiary, which has been in the pipeline for 15 years, would allow the ports authority to make its own investment decisions and ensure that it treats all terminal operators fairly and equally in the interests of port users.
It will have its own board appointed by Public Enterprises Minister Pravin Gordhan in the coming weeks.
“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.
“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,” he said.
Transnet has put in place an ambitious plan to invest R100 billion over the next five years in upgrading its infrastructure across the ports system, announced Ramaphosa.
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.
“This is a significant development because this reform has been delayed for more than fifteen 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.”
He said state ownership of the ports remained government's policy and “we will not compromise on it”.
He also assured South Africans that there will be no jobs lost as a result of the creation of the new subsidiary; only greater efficiency and more investment.
“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” he said.
Cape Times shipping columnist and author of eight marine books, Brian Ingpen said : “If the new structure really allows revenues generated by the ports to be invested only in port infrastructure to upgrade equipment and to expand the ports – and not to repair vandalised railway buildings in remote sidings or to buy over-sized locomotives with the related kick-backs – the ports will be able to surge ahead.
“Most will agree that the private sector can play a significant, even vital role in partnering with the new body to improve and expand harbour facilities and to invest in new infrastructure, as is already the case in several bulk cargo terminals.
“However, private investors will want a bit more enticement than currently is the case. Longer term leases, less red tape (including dispensing with unrelated political requirements) and reasonable rentals on terminals and space will need to be offered to attract significant investment.” (See his full reaction on page 4)
Premier Alan Winde said an efficient and world class port would also go a long way in bolstering the province's agricultural sector which was a significant exporter in the province.
“By supporting the port, and this industry, we will unlock a greater number of job opportunities for those who need it most.
“We must strive to match the outputs of other major port cities and in doing so, bring on board private partners who can assist us in achieving this.”
MANY aspects of President Cyril Ramaphosa’s announcement that the National Ports Authority will be restructured are to be welcomed.
Indeed, the recent high-level interest shown in the ports is most encouraging to the shipping sector and also to those hard-working, efficient, honest but discouraged port officials who may have felt they had been forgotten.
If the new structure really allows revenues generated by the ports to be invested only in port infrastructure to upgrade equipment and to expand the ports – and not to repair vandalised railway buildings in remote sidings or to buy over-sized locomotives with the related kick-backs – the ports will be able to surge ahead.
Most will agree that the private sector can play a significant, even vital role in partnering with the new body to improve and expand harbour facilities and to invest in new infrastructure, as is already the case in several bulk cargo terminals.
However, private investors will want a bit more enticement than currently is the case. Longer term leases, less red tape (including dispensing with unrelated political requirements) and reasonable rentals on terminals and space will need to be offered to attract significant investment.
As over 90 percent of the country’s trade passes through the ports, unions need to understand that hampering port operations in any way retards economic growth in a country that is desperate for employment and foreign exchange. The president held Singapore as the icon of port efficiency – but I cannot recall any industrial action there; rather, as a leading figure in South African shipping put it: “Those guys know how to work!”
The composition of the interim board which the president said would be appointed by next week to oversee the establishment of the new subsidiary will be interesting. More importantly, the permanent board should be appointed speedily, but this is not a place for loyal cadres. Rather, experienced shipping people – including seasoned shipmasters, marine engineers and port agents – need to be among the directors so that oversight of the ports is done by people who know and understand the nature, standards and requirements of international shipping.
And many aspects of current practice await their urgent attention.
New technology, proper maintenance of existing equipment, replacement of obsolete equipment and up-skilling of workers will improve operational performance, although some current systems also need to be overhauled.
Among these are the “dead times” during shift-changes and lunchtimes; staggered breaks must be introduced to ensure that ships can move when they need to, and not have to wait for harbour services. Protracted procurement procedures and systems must be revised urgently to allow for the rapid fixing of equipment or the purchase of new equipment.
Perhaps this is the chance for the new board to view ports, not merely as a way of making money for the restructured Port Authority, but as vital catalysts for the development of the myriad of ancillary services who employ thousands and, with improved port operations, will have the capacity to employ many more, and earn foreign exchange.
Welcomed port visits by the president – despite his hectic schedule – give recognition to an essential, often neglected and unnoticed service, and form a significant starting point to the revitalisation of port operations.
From here, the new ports structure needs to pick up speed very quickly to develop further those really good and effective parts of the current port operations, and to revise outdated and inefficient systems, while actively encouraging the participation of private enterprise.
And perhaps under new dispensation, that essential large drydock will be built.