Portnet: Briefing

Meeting report

PUBLIC ENTERPRISES AND TRANSPORT PORTFOLIO COMMITTEES: JOINT MEETING
28 March 2001
PORTNET: BRIEFING

Chairpersons: Mr ST Belot (ANC) and Mr JP Cronin (ANC)

Documents handed out:
Port Authority Division Presentation
Port Operations Division Presentation

Portnet delegation: Mr M Mkwananazi, Managing Director of Transnet; Mr S Gama, Chief Executive Officer of the Port Authority Division; Mr T Maree, Chief Executive Officer of the Port Operations Division.

[Note: PMG did not monitor the whole of this meeting]

SUMMARY
The 1996 White Paper on Transport policy found a need to split Portnet into two entities: Port Authority Division (PAD) and Port Operations Division (POD). POD handles cargo activities. These are purely commercial. PAD deals with landlord and marine activities. PAD is appropriately aligned in global terms to play a public enterprise role and be self-sufficient and cost effective. It will also be creating an appropriate regulatory framework to put in place measures for private sector participation.

The division process has been taking place through a phased top-down implementation since around May 2000.

MINUTES
Mr Gama informed the Committees there are seven ports on the South African coastline starting from Richards Bay on the KwaZulu-Natal coast to Saldanha Bay on the Western Cape coast. The proposed Port of Coega would be the eighth commercial port.

A decision, coming from the White Paper on Transport of 1996, was taken to divide Portnet into two entities, the Port Authority and Port Operations Division. A phased top-down implementation approach was introduced around May 2000.

The rationale for this division
The 1996 White Paper on Transport policy found a need to split Portnet into two entities. Cargo handling operations (what is called Port Operations today) were separated from the operation functions which deal with landlord and marine as well as the infrastructure development of the port system.

In separating these types of activities, South Africa is in line with global trends. Cargo handling activities are purely commercial while landlord and marine activities are about services.

The process of division was done in six phases.

Progress to date
One of the key issues is the Tariff Reform and Restructuring of Pricing policy. There was an imbalance in that the mortgage income was higher than world norms and the cargo handling tariffs were 30 to 50 percent below world norms. These are now being restructured and re-balanced.

Two separate balance sheets have been created and assets have been allocated to each of the entities accordingly. For instance, the Port Authority Division assets are immovables like land and water while assets of the Port Operations Division are moveable property, like cranes used to move cargo.

Vision
The vision is to offer services in a cost competitive manner and that the port system be generally reliable and convenient.

Challenges
The main challenge is for the Port Authority Division to be appropriately and globally aligned to play a public enterprise role and be self-sufficient and cost-effective.

[The meeting was not monitored further by PMG. See attached Powerpoint presentations]