More than a year after South Africa’s freight industry learned that Transnet awarded a concession tender to International Container Terminal Services Incorporated (ICTSI) to operate Pier 2 at the Durban Container Terminal (DCT), the privatisation process has been halted—at least for now.
This development follows a ruling by the Durban High Court in favor of an interdict application lodged by APM Terminals last October.
Transnet had awarded ICTSI a 25-year partnership to operate DCT Pier 2, allowing the Philippines-based concessionaire to acquire 49% of the terminal, with an investment estimated at R11 billion over the contract period.
APM Terminals, a rival bidder, argued that the tender award process was flawed, asserting that ICTSI did not meet certain solvency requirements specified in the tender.
While the South African freight industry is reeling from the court’s decision, there is a general consensus that the Port of Durban urgently needs efficiencies that could be achieved through privatisation. The success of APM Terminals’ interdict was not unexpected.
During a recent hearing before Judge Rob Mossop, Transnet’s case, presented by Nick Ferreira, faced significant scrutiny for what appeared to be serious missteps by the state-owned logistics provider.
On September 16, Freight News reported that the ICTSI deal was on shaky ground after Judge Mossop thoroughly dismantled Transnet’s arguments.
A report by the Sunday Times on September 13 indicated that ICTSI’s bid should have been disqualified due to its solvency ratio of 0.24, which fell below Transnet’s required ratio of 0.4 as outlined in its request for quotations (RFQ).
The report noted that solvency ratios indicate whether a company can meet its financial obligations over the contract term.
According to Business Times, Transnet’s RFQ stipulated that a bidder must have a solvency ratio of at least 0.4, calculated by dividing total equity by total assets.
Ferreira explained that Transnet required bidders to demonstrate sufficient financial capacity to secure the necessary funding for planned investments in DCT Pier 2.
Mossop challenged Ferreira, asking, “Where does it say that?” to which Ferreira admitted, “It does not say that.”
He elaborated that bidders would qualify if they could show they had the financial means to meet the contract requirements, but Mossop pressed, “How would anyone know that from reading the tender documents?”
In response to the interdict ruling, Transnet acknowledged the KwaZulu-Natal High Court’s decision regarding APM Terminals’ application.
The parastatal expressed its commitment to the judicial process and stated it was evaluating its options while remaining determined to finalize the transaction swiftly for economic growth and development.
A source in Durban’s freight forwarding industry described the ruling as a significant setback, stating, “This port has been poorly run for years, and the ICTSI deal promised much-needed improvements.
Now, we appear to be back to square one, leading to more delays, frustration, and revenue losses due to the government’s ongoing failure to get its house in order.”
Given the importance of awarding a concession at the country’s leading port—hampered by years of capacity shortfalls and high-level corruption—industry insiders expected Transnet’s executives to ensure a flawless tender process.
