Durban - ORGANISED business and labour unions have described Transnet’s National Ports Authority looming relocation of its head office to Port Elizabeth as a decision that would have a negative impact on the economy on the city of Durban.
However, a leading economist viewed the move into the four-year-old R255 million eMendi building as a move that would be profitable in the long term.
Transnet head office status was jointly held by Durban and Joburg.
Transnet National Ports Authority (TNPA) chief executive Pepi Silinga said in a statement that the decision was informed by “ongoing cost-saving and efficiency initiatives”.
“The ports authority is consolidating its various corporate offices— currently split between Joburg and Durban — into one… Relocation of a head office of any large organisation is a significant business decision that is preceded by serious strategic considerations,” Silinga said.
Justifying the exodus from Joburg, he said relocating a “sea port authority’s head office from a landlocked city, closer to its operations (which are on the harbours), ensures that TNPA serves its customers at the point of execution, while bringing about savings of approximately R25m a year from lease agreements”.
He said the 10 000m² eMendi building was completed in 2017 but remained under-used while it had an opportunity to “significantly deliver costs savings for Transnet.
“Transnet sees the consolidation of TNPA in the EC as an important contributor to the revival of that province’s economy, as it increases the ease of doing business. Among other things, TNPA facilities in PE have contributed to record citrus exports in the past year, and shown encouraging growth in the export of motor vehicles from EC assembly plants,” he said.
Durban Chamber of Commerce and Industry chief executive Palesa Phili said she was shocked to learn of the relocation plan only in the media.
“Transnet is a key business asset of this country, and as the key stakeholders and port users, it beggars belief that such a significant decision that affects the business ecosystem of the entire country and, indeed, the entire SADC region, would be taken without due engagement with the organised business community,” she said.
“As the chamber, we strongly believe that the City of Durban remains the best positioned port city in South Africa to host Transnet’s head office,” Phili said, citing as the rationale the fact that the Durban port is the largest and busiest shipping terminal in sub-Saharan Africa.
Phili said the chamber had raised the concerns “at the highest levels of national government starting with President Ramaphosa and Minister Gordhan (for Public Enterprises).
Leading economist Irshad Kaseeram saw long-term economic spin-offs as a result of the move to the Eastern Cape.
He said Durban, while being the biggest Port in the Southern Hemisphere, had been struggling to handle the huge volumes of cargo, resulting in it becoming inefficient in processing containers.
He said Transnet’s move would only be a short-term blow to the local economy.
“PE has the necessary infrastructure through the formation of the Coega Special Economic Zone, which will help facilitate more efficient processing. Given the huge flow of superlinks from Johannesburg to Durban, there are more than enough opportunities for Durban to become more efficient in cargo handling and vessel turnaround times which will in turn attract more ships to the Durban port in the medium term.”
South African Transport and Allied Workers Union secretary general Jack Mazibuko said the union had asked management to resume the process of consultation, as it was not adequately conducted and the proposed move itself was a miscalculated and financially wasteful idea.
MEC Ravi Pillay said as the provincial government, while dismayed, accepted that the decision was taken on the basis of improving efficiencies.
"As much as we would have liked Durban to be the preferred choice, we understand that the main driver is that there is this massive building (eMendi) which has been built, and it makes sense to make use of it in terms of efficiencies,“ he said.
"Yes we are all on the same page that Durban is the hub port in the country, hence there has been ongoing discussions and work to have significant investment over the next five to 10 years," he said.
The Mercury