South Africa’s state-owned rail, port, and pipeline company Transnet has selected Philippines-based international terminal operator, International Container Terminal Services Inc. (ICTSI), as the preferred bidder and equity partner for a joint venture to develop and upgrade its flagship Durban Container Terminal (DCT) Pier 2. The private sector participation process for DCT Pier 2 comes amidst ongoing operational difficulties and is poised to increase competition, boost efficiency and reliability, and serve as a catalyst for repositioning the Port of Durban as South Africa’s prime harbor.
“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port,” stated Transnet CEO, Portia Derby, adding that, “We are delighted to have a global player of ICTSI’s standing on board to drive this process.”
DCT Pier 2 is Transnet’s largest container terminal, handling 72% of the Port of Durban’s throughput and 46% of South Africa’s total port traffic.
Furthermore, Transnet is set to establish a special purpose vehicle along with ICTSI to run the Port of Durban for an initial 25 years, with the option to extend the contract to 30 years. According to the deal, Transnet will have a majority ownership of 50% plus one share, while non-current assets of the port will be transferred to the new company. “The partnership in Pier 2 is a major step forward for our program to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth,” Derby indicated in Transnet’s statement.
Regarded as the world’s largest independent terminal operator, boasting 34 terminal operations in 20 different countries, ICTSI beat out five bidders who submitted proposals after being shortlisted from 17 potential equity partners responding to an August 2021 request for interest.
South Africa’s government has identified private sector participation in the country’s ports as a key reform under its Operation Vulindlela program, whose purpose is to stimulate economic growth and promote job creation in the country.
