Kamlesh Bhuckory
TransneT has defended its monopoly of the country’s eight commercial ports and said it would make no sense for private operators such as France’s Bollore to enter the market.
“We are sitting on natural monopolies” as the ports did not compete with each other, chief executive Brian Molefe said in an interview last week. “Is a natural monopoly better in private or state hands?”
Transnet owns and operates all eight commercial ports and 16 cargo terminals.
“The country isn’t big enough to have anything else than what we have,” Molefe said. “The ports handle what a country of our size can handle.”
Ports and terminals accounted for about 42 percent of Transnet’s earnings before interest, tax, depreciation and amortisation in the six months to September last year.
French billionaire Vincent Bollore’s investment company wants to increase the number of African ports it manages to 19 from 14. The group was investing e250 million (R3bn) to e300 million in Africa each year, Bollore Africa Logistics managing director Philippe Labonne said last month. The company would like to expand into South Africa, he said.
“Private sector participation in ports management can be complementary to Transnet’s internal programme, in terms of sharing risks and investments,” Goolam Ballim, the chief economist and global head of research at Standard Bank, said. “So, partnerships can be especially fruitful.
“Transnet appears to be piloting toward a more commercially functioning entity,” he said. “It is emphasizing major hubs stretching from Richards Bay to Cape Town. The Durban port is crucial to South Africa’s external trading relevance, and success here can be catalysing.”
As Transnet presses on with a R300bn investment plan to upgrade and expand port and rail infrastructure, the company is charging different prices for bulk and container goods under a tariff structure set many years ago. The ports regulator did not fully approve a Transnet proposal to alter the tariffs to cut prices for containers and increase bulk goods costs.
“We will not appeal,” Molefe said. “That debate really is not about how much money comes to Transnet.”
The aim was to encourage manufacturing, he said.
Manufacturing, which accounts for about 15 percent of the economy, has struggled to expand amid labour unrest and waning demand from Europe, which have reduced the benefits from a weaker currency.
Transnet’s expansion plans included new rail services to the agriculture industry, Molefe said.
About 18 percent of maize was transported by road last year, down from 34 percent in 2004, according to data from the SA Grain Information Service.
The operation of rail lines for dedicated businesses would probably lead to the increased transport of crops, Molefe said.
The company is also seeking to export Botswanan coal.
“We see a huge opportunity there,” he said.
The number of trains the company operates daily has risen to 1 200 from 700 two years ago. Transnet would start building a new line to Richards Bay through Swaziland “certainly” by 2014, Molefe said.
That will allow it to boost coal shipments on the line to a terminal that has bigger capacity than the lines it is served by. Within two to three years more than 90 million tons of coal a year might be railed to Richards Bay, he said.
The port has the capacity to export 91 million tons of coal annually and shipped 68.3 million tons last year.
Still, the Swazi rail line faces challenges. “The terrain is very hostile. It is mountainous,” he said. “They have to find the straightest routes.” – Bloomberg