A plan by Transnet to assign the management of a Durban container terminal to a Philippines company has hits a snag.
On October 9, the Durban High Court interdicted the parastatal from negotiating, finalising or executing any agreements with International Container Terminal Services Incorporated to manage Durban Container Terminal Pier 2.
The interdict was sought by APM Terminals, a company owned by Danish shipping firm AP Moller-Maersk. APM Terminals was unsuccessful in the bidding process for the contract, and went to court to challenge the decision.
ICTSI had pledged an investment of more than R11-billion through upgrading the terminal to increase its capacity.
APM contended that the contract granted to ICTSI was tainted by irregularities, particularly because of a concession that enabled the winner to misrepresent its financial stability.
Transnet’s choice to allow ICTSI to utilise market capitalisation as an indicator of solvency, instead of depending on balance sheet equity, resulted in a distorted perception of its financial strength, it APM argues in court papers.
This advantage, says APM, was not extended to other bidders, raising questions about the rationale for this preferential treatment.
The legal case has entered its significant second phase, with APM petitioning the court to invalidate the contract.
Transnet spokesperson Ayanda Shezi told Sunday World that the selection of ICTSI for the 25-year joint venture with Transnet Port Terminals to develop and upgrade the terminal followed “a lawful, fair, and transparent procurement process” last year.
Shezi said Transnet had not bypassed the approval process with the Competition Commission, Treasury and the National Port Authority.
“As the court has issued an interdict, all work on the implementation of the transaction has stopped. The Competition Commission approved the transaction prior to the court interdict being issued. The delays … are regrettable,” she said.
Sunday World understands that the continuation of the legal battle may lead to a drawn-out process, which would adversely affect Transnet’s turnaround initiatives.
An insider within the shipping industry said: “The tender was designed to prioritise the most advantageous purchase price for the port, allowing the chosen bidder to determine their own terminal handling charges. This arrangement is anticipated to increase the costs of exports and imports, as the winning bidder will likely seek to recover the purchase price through handling charges.”
Another source revealed that the debacle would place
exporters and importers in a precarious position.
“Ultimately, this could render South African ports less competitive and lead to significant losses for businesses operating in South Africa.
