ATC131107: Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet Port of Durban, dated 22 October 2013

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet Port of Durban, dated 22 October 2013

1.         Introduction

The Portfolio Committee on Public Enterprises (the Committee) undertook an oversight visit to the Transnet Port of Durban from the 1 - 2 August 2013.

The main purpose of the visit to the Port of Durban was to: assess progress that has been made in the expansion of the port, the social impact of the project and the conditions of workers.  The Committee met with the executive management of Transnet National Ports Authority (TNPA), Transnet Port Terminals (TPT), organised labour and also present was a representative of the KwaZulu-Natal Department of Economic Development and Tourism.

1.1        Delegation

The committee delegation included the following members:  Mr P Maluleka (Chairperson of the Committee, ANC), Dr GW Koornhof (ANC), Ms M Pilane-Majake  (ANC), Mr D Ximbi (ANC), Mr A Mokoena (ANC), Mr C Gololo (ANC), Ms N Michael (DA) and Mr E Marais (DA). The delegation was accompanied by the following parliamentary officials: Mr D Mocumi (Committee Secretary), Mrs Y Cele (Committee Assistant), Mr R Mnisi (Content Advisor) and Mrs L Bramwell (Committee Researcher).

2.         Overview of the Port of Durban

The Port of Durban is ranked second in Africa and 4th in the Southern hemisphere in terms of container through-put. It is the busiest port in Africa in terms of vessel calls (+4000pa). The Transnet National Ports Authority (TNPA) owns the land of the port and terminals. The Transnet Port Terminals operates the terminals; it operates the container handling, and bulk container terminals, manganese, coal, also run by Transnet. Approximately 61 per cent of all container imports and exports pass through the port of Durban. For the 2012/13 it handled 78 million tons of cargo. There are 1173 employees working for Transnet National Ports Authority.

The job creation targets that aimed through the expansion programme are highlighted as follows:

• The expansion of the port will include the reconstruction of Sheet Pile Quay Walls at Maydon Wharf and will yield 1 000 jobs,
• the deepening of the berth targets approximately 16 000 jobs and
• The Durban Dig Out Port will create approximately 64 000 jobs.

Durban Container Terminal – Pier two received seven new state-of-the-art ship-to-shore cranes to boost productivity and efficiency at the port.  These new cranes will increase productivity with gross crane moves per hour (GCH) increasing from the current 26 to 33 GCH over the next three years.  The company is making progress with regard to gender transformation with 30% of its crane operators that are women. The port want to keep ahead of demand by creating the necessary capacity.

2.1        Key Drivers for Additional Port Capacity

The Committee was informed that studies have showed that container demand was set to grow from the current levels of 2.7m Twenty-foot Equivalent Units (TEUs) per annum to between 9million and 12million TEUs by 2040. The existing Port of Durban is not going to be able to meet the required demand. The other factors included the following:

•           The changing nature of the shipping industry.

•           Container vessel sizes had more than doubled in the last 10 years.

•           Prediction that the latest generation 18,000 TEU Triple-E container vessels would begin calling in Durban within the next decade.

•           New deep water, world-class ship handling facilities are required in Durban for South Africa to retain status as the primary shipping gateway into Southern Africa.

•           Enablement of the industrialisation of the Durban-Free State-Gauteng Corridor.

•           Long-term economic growth & transition of the economy through industrialisation.

•           Job creation, with a specific focus on the South Durban Basin.

2.2        Update on the Durban Port Expansion Programme

The Transnet National Ports Authority gave the Committee an update regarding progress that has been made on the Durban Port Expansion project, and these were some of the key issues that were highlighted in the presentation:

• Transnet was still in negotiations with the Department of Public Works and Department of Defence and Military Veterans (who owns the land) regarding the expansion into Salisbury Island.
• Maydon Wharf reconstruction and deepening of the north quay has cut into the budget over the medium term.
• TNPA was busy training pilots for helicopters as well as maintenance of the helicopters.
• Approximately 100 000 ten-foot equivalent units (TEUs) were handled on Maydon Wharf.
• TNPA was investigating a sophisticated booking system to try to sequence the work by trucks coming into the port to stop the congestion on Bayhead Road.
• As part of the expansion project, Transnet was looking at building a new road for trucks to gain direct access onto the N2 from the port.
• Approximately 22 per cent of stock was moved by rail, and the entity was looking at expanding the rail system as well.
• Port moving towards becoming a Green Port, cranes moved from hydro-diesel to diesel-electric which are able to generate electricity to put back into the grid.
• The expansion of other African ports such as Ghana, Kenya, Djibouti, are not seen as a threat to South Africa’s expansion efforts.
• The Quagga terminal is a trans-shipment port, and complements the other ports in South Africa. All South African ports are complementary to each other, servicing different and similar purposes.

The Committee was satisfied with the presentation although they would have liked to have seen more on the demographics of employment at the Port such as the number of employees, number of female to male workers, etc.  In response to concerns over environmental controls, Transnet assured the Committee that they adhered to all environmental laws and was moving towards a Green Port.

2.3       Update on the planned Durban Dig Out Port (Old Durban Airport Site)

The Committee received a presentation on the planned Durban Dig-Out Port (DDP) project, and these were the main highlights of the presentation:

• Transnet Port Terminals have completed the preliminary phase of the port.  The design of the port may still change.
• Due to the proposed entrance to the port, the single buoy mooring might need to be relocated.  The project was huge and would be very costly.
• The contaminated site has been checked and has been deemed easy to resolve.
• Stakeholder engagements with communities that would be affected by the development of the port were still in progress. The Isipingo farmers had recognised Transnet as the owner of the land, but that Transnet did not have the right to move them from the land. However negotiations were at an advance stage for a solution.
• The feasibility report was due at the end of 2013 regarding design and this will inform the company what decisions needed to be made.
• The decision on which project to start first between the Salisbury Island expansion or the dig-out port will be taken by the end of 2013.
• Transnet has undertaken all environmental assessments and biodiversity care to ensure that the environment was preserved.
• TNPA was in the processing of training pilots to operate and maintain helicopters.

2.4        Meeting with organised labour

The Committee interacted with organised labour to understand their challenges and relationship with Transnet. The Port has two main unions on site, namely:   the South African Transport and Allied Workers Union (SATAWU) and South African Railways and Harbour Union and United Transport and Allied Trade Union (SARHWU - UTATU). SATAWU represents 60 per cent of workers, while SARWU represents 30 per cent. These unions had a good relationship with Transnet. The following issues were raised by the labour representatives:

2.4.1     Threat posed by the National Ports Act, 2005 (Act No 12 of 2005) which allowed for competition from the private sector. The Act imposed obligatory competitive processes to allocate the port operations, thus making Transnet Port Terminals to compete with private sector operators. Organised labour argued that the private sector would automate work and maximise profits with no focus on job creation. Organised labour had since lodged a section 77 application to Nedlac, in support of their demand that the Act be amended.

2.4.2     With regards to the new proposed dig out port project, employees needed to be trained in order to promote their growth and make them ready for the expansions.

2.4.3     The Merchant Shipping Act required maritime training to involve trainees spending a certain number of hours on the ship, and the challenge was that South Africa did not own ships.  The use of private ships posed a security risk to the trainees. Furthermore, sea time operations clashed with port work as well.

2.4.4     Need for Transnet to reach out and promote its operations to the rural schools.

2.4.5   Programmes to adopt rural communities should be broadened to cater for more communities in the rural KwaZulu-Natal, especially far flung areas experiencing severe socio-economic pressures.

2.5       Input from the KZN Department of Economic Development and Tourism

The provincial Department of Economic Development and Tourism in KwaZulu-Natal was represented by Mr Bheki Nowele, who informed the Committee that they regarded Transnet as a partner. The Minister of Public Enterprises has met with the Mayor of eThekwini, MECs and the Premier regarding the alignment of the developments with the Provincial Growth and Development Strategy (PGDS) of KZN Government and the Integrated Development Plan (IDP) of the eThekwini Metropolitan Municipality.  There was a provincial economic council which included Transnet, the municipality and the provincial government which provides a platform where issues of mutual interest were discussed.

2.6       Socio-Economic Development

Transnet has adopted villages identified by employees as part of the Corporate Social Investment (CSI). In January 2013 launched a Maritime School of Excellence, want to position SA as leading maritime school, which is in line with its vision. Transnet expected to create 64 000 construction jobs and 28 000 operational jobs with the expansion project. The Port adopted the Sithengile Secondary School, provided support to Durban University of Technology and University of KZN marine students, and has 22 graduates in training and has awarded 64 bursaries in engineering and technical fields.

3.         Challenges

These were some of the challenges that were identified by Transnet:

3.1        Tariffs, terminal handling charges were negotiated annually and were inflation indexed and very competitive internationally.   The tariff needed to be sustainable for the port and be competitive internationally. Additional charges were due to port duties, and those charged by SAMSA.

3.2        Recruitment of trainers to work at the Transnet School of Maritime Excellence.

4.         Observations

The Committee made the following observations:

4.1        The Committee was impressed with the size of the port and its capabilities and supported the expansion of the port.

4.2        The Committee was impressed to hear that the relationship with organised labour was sound and an effort was made to realise job creation and retention.

4.3        Transnet should broaden their social responsibility programmes to be all-year round and expand programmes to the rural areas.

4.4        Noted the adverse effect of the National Ports Act, 2005 (Act No 12 of 2005) in terms of job creation and threat to international trade.

5.         Recommendations

The Committee made the following recommendations:

The Minister of Public Enterprises should ensure that Transnet:

5.1        promotes port careers to the rural areas of South Africa.

5.2        forwards the report of the socio-economic study to the Committee when it has

been completed.

5.3        keeps the Committee informed of the decisions on the dig-out port and the Salisbury Island expansion projects.

5.4        forwards detailed information regarding employment equity and transformation indicators.

The Minister of Public Enterprises should consider addressing the adverse impact of the National Ports Act, 2005 (Act No 12 of 2005) as raised by organised labour in this report.

Report to be considered.