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Transnet selects international operator for Durban port upgrade

Transnet has selected a Philppines-based multi-national port terminal operator as an equity partner to develop and run its busiest and biggest container terminal – Durban Port’s Container Terminal Pier 2.
International Container Terminal Services Inc. (ICTSI) won the contract as the Preferred Bidder for the 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade the terminal, the state-owned entity announced in a statement on Thursday.
DCT Pier 2 is the state-owned logistics utility’s biggest container terminal, handling 72% of the port’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,” Transnet Group chief executive Portia Derby said.The finalisation of the process follows approvals by the government in terms of the Public Finance Management Act (PFMA).
ICTSI, headquartered in Manila, is the largest independent terminal operator and a publicly-listed company, traded on the Philippine Stock Exchange and the Over-the-Counter Markets Group in the United States.  The company manages 34 terminal operations in 20 countries across six continents, including four in Africa. 
According to Transnet the partnership with ICTSI will reposition the terminal for “best practice performance”, ensuring growth in volume throughput and providing operational and commercial support to access global shipping line call routes.
Transnet aims to grow Pier 2’s current capacity of two million TEUs to 2.8 million.
This is aligned with Transnet National Ports Authority’s (TNPA) plan to increase the current container capacity in Durban from 3.3 million TEUs to an envisaged capacity of 11.4 million TEUs.
“The partnership in Pier 2 is a major step forward for our programme 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 said.
A total of 18 responses were received to Transnet’s initial call for request for expression of interest in August 2021, nine from global terminal operators.
Ten bids were shortlisted in response to a request for qualifications, and six of these submitted proposals.
Transnet said a new company will be formed to manage the operations at DCT Pier 2, in which it will have majority ownership of 50% plus one share, but none of its currently owned assets will be transferred to it. 
The transaction term is 25 years, with the option to extend it to 30, if there are delays completing berth-deepening of the North Quay at Pier 2.
The terminal operating licence and lease will be subcontracted to the new company.
Transnet has assured staff there will be no job losses as 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 the private sector partner,” Transnet said in the statement.
The parastatal said it will now work with the preferred bidder to implement the transaction through the execution of legal agreements, and ensuring compliance with all legal and regulatory matters. 
The new company must achieve a minimum level 4 BBEE contribution status.
ICTSI is ranked the eighth largest independent container terminal operator globally, according to TEU volume.
It has 11 000 employees.
In 2021/22 financial year, ICTSI handled over 12.2 million TEUs and generated more than 2.2 billion USD in gross revenues from port operations. 
Transnet added that it will outline its plans for the Ngqura Container Terminal in due course.

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