South Africa Reorganizes Ports Structure to Boost Efficiency

(Bloomberg) -- South Africa will reorganize the management structure of the nation’s ports to make them more efficient, one of a series of reforms aimed at bolstering economic growth, President Cyril Ramaphosa said.

The overhaul will see the establishment of an independent national ports authority as a stand-alone subsidiary of Transnet SOC Ltd., the state-owned ports, freight rail and pipelines operator. The institution will own the infrastructure, while the harbors will be operated by Transnet Port Terminals.

“The functional and legal separation of these roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency,” Ramaphosa told reporters after visiting the Cape Town port on Tuesday. “It will mean that revenues generated by the ports can be invested in port infrastructure, both for the replacement of old equipment and for upgrading and expansion.”

Importers and exporters have long complained about lengthy waits to process their goods. The issue is being addressed, with Transnet planning to invest 100 billion rand ($7 billion) to upgrade its infrastructure, Ramaphosa said.

While ports, along with rail infrastructure, are considered strategic assets and will remain government-owned, private investors will be encouraged to partner with the state to improve terminal operations and build new infrastructure -- which has already happened in several bulk cargo terminals, according to the president.

Transnet is finalizing which assets and liabilities the two port units will hold and will complete the reorganization as soon as possible, said Portia Derby, its chief executive officer.

The overhaul of South Africa’s logistic’s infrastructure could take 10 to 15 years, according to Public Enterprises Minister Pravin Gordhan. While the ports could handle increased traffic, the nation’s railways are “a massive problem,” he said.

“Firstly, the theft of copper cables means that often electric locomotives have to be changed for diesel ones,” Gordhan said by phone from Pretoria, the capital. “Then there is also the theft of railway track and that takes a long time to replace. Lastly, the financial mismanagement of the recent past meant that money was diverted to big capital projects, such a buying the wrong locomotives, instead of doing maintenance.”

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