ATC150811: Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet Port of Durban, dated 5 August 2015

Public Enterprises

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet Port of Durban, dated 5 August 2015

 

1. INTRODUCTION

 

The Portfolio Committee on Public Enterprises undertook an oversight visit to Transnet Port of Durban on the 3 February 2015. The purpose of the visit was to familiarise the Committee with the operations and investments of Transnet at the Port, to assess the socio-economic impact of the investments in terms of job creation, skills development, promotion and support of local businesses and the beneficiation.

 

The Committee was welcomed by the leadership of Transnet, Mr B Molefe, Transnet Group Chief Executive, Mr M Motlohi, Port Manager for Port of Durban (TNPA), Mr Karl Socikwa, Chief Executive for TNPT, Mr S Gama, Chief Executive for TFR and Mr H Msagala, Chief Executive for Transnet Capital Projects.  The Committee were given presentations on the Port of Durban run by the National Ports Authority, Port Terminals, Freight Rail and Capital Projects. The following issues emanated from the presentations: Transnet made three presentations to the Committee which included (i) Transnet National Ports Authority, (ii) Transnet Port Terminal, (iii) Transnet Freight Rail and (iv) Transnet Capital Projects. The Committee also undertook a site visit of the Port.   

 

This report provides an overview of the visit, observations and recommendations emanating therein.

 

2. COMPOSITION OF THE DELEGATION

 

The multiparty delegation consisted of the following Members:

 

Portfolio Committee on Public Enterprises:

• Ms Z Rantho (ANC) (Leader of delegation)
• Ms G Nobanda (ANC)
• Mr M Tseli (ANC)
• Dr M Luyenge (ANC)
• Mr K Morapela (EFF)
• Mr A Singh (IFP)
• Mr N Kwankwa (UDM)

 

Committee Support Staff:

• Mr Disang Mocumi, Committee Secretary - Portfolio Committee on Public Enterprises
• Ms Lee Bramwell, Researcher - Portfolio Committee on Public Enterprises
• Mr Rodney Mnisi, Content Advisor - Portfolio Committee on Public Enterprises

 

3.         PRESENTATION ON THE PORT OF DURBAN

 

3.1       The National Ports Authority

The Transnet National Ports Authority was in the process of negotiating with the navy for part of Salisbury Island to expand Pier 1, the deal was nearing an end. An amount R27 billion of the Market Demand Strategy has been allocated to the Port of Durban, or approximately 40 per cent of the mega project budget. That amount excluded the cost of the Dug-Out Port for which only R3.8 billion was allocated for the land and feasibility studies. The project is estimated to cost R90 billion but could escalate to R120 billion. The challenges that have been identified in the port include the following, there were not enough locomotives and wagons to transport goods, and that there are community members who were illegally occupying land that has been earmarked for development.

 

Major commodities that are handled at the port comprised of petroleum at 41.8%, containers at 39.3% and other commodities at 18.9%. Some of the major products that are exported from the port include Manganese, vehicles, maize, steel, chrome, and coal.

 

3.2        The Transnet Port Terminal

Transnet Port Terminal provides cargo handling services at 16 terminal facilities in seven ports to a wide range of customers including shipping lines, freight forwarders and cargo owners. Operations are in containers, bulk, break-bulk and automotives. Transnet Port Terminals is Africa’s biggest container terminal operator in terms of volumes handled. In line with Transnet’s new market demand strategy (MDS) and related investments, Transnet’s Port

Terminals are currently expanding in response to growing business in the country. Expansion includes creating storage capacity, the replacement of old equipment and upgrading of

software.

 

 

The Durban Roll on Roll off Terminal is the biggest car terminal in Africa. The terminal handles 65% of the total automotive volume in South Africa. Some of the major Original Equipment Manufacturers handled at the terminal include: Toyota, BMW, Ford, Nissan and AMH. The terminal handled the highest volumes in 17 years of operation during 2013/14 by handling 487 000 units.

 

3.3 SOCIO - ECONOMIC CONTRIBUTIONS

3.3.1     The Transnet National Ports Authority

The Transnet National Port Authority (TNPA) trained 27 pilots in the last 18 months, 87 tug masters of which all are local with 45 of these being women. The TNPA further trained 86 pilots of which 26 were female, and 4 chief marine engineers. There are 50 learners from poor schools who are attending Saturday Maths classes. The TNPA has adopted 15 schools, which have benefited from the technology that has been developed to improve teaching and learning methods, eg electronic smart boards. As part of preparing young people for careers at the sea, and also for equipping youth with the swimming skills, there are swimming lessons conducted in the townships of Umlazi and Lamontville.

 

There are young people who have received bursaries to study at different universities in the country, and the Port of Durban has allocated 15 bursaries for students to study at Durban University of Technology. These are some of the fields that Transnet is training youth, they include, engineers, technicians, marine pilots and aircraft maintenance engineers.

 

3.3.2    The Transnet Port Terminal

In terms of advancing the developmental objectives of government, the Transnet Ports Terminal has the following programmes: they are training 3 Engineers, 14 Technicians, 3 Interns and 10 females were exposed to TECHNO girl youth project. A number of 72 employees have received bursaries to further studies. TPT sponsored 20 Black Women in Engineering businesses to be empowered through Bosch Ulwazi Enterprise Development. 10 Black Youth cooperatives in Rural KwaZulu-Natal trained in entrepreneurship and manufacturing of the following products: Exercise Book, Toilet paper making and Barbed wire.

 

 

4.         SITE VISIT TO THE PORT OF DURBAN

The Committee was then taken on the Isiponono boat for a tour of the Durban harbour.  The tour encompassed Pier 1 and Pier 2, Salisbury Island, the Coal terminal, the oil and gas terminals, the floating docks for ship repair, Maydon Wharf, amongst others. This tour gave the Committee a better understanding on the magnitude of the expansion project and the constraints that the port is experiencing. 

 

5.         OBSERVATIONS

The Committee made the following observations:

 

1.     The Committee acknowledged the good work that Transnet was doing in terms of

progress regarding the expansion of the port and improvement of efficiencies.

1. Concern was expressed that Transnet needed to invest in the rural communities, especially in theEastern Cape and Northern Cape ports.

    

1.      Concern was raised regarding the low target of 30% allocation for localisation, 

     and it was proposed that the company move the target to 60%.

1.      A concern was raised regarding the lack of emphasis on youth development 

     across the business units of the port.     

1.      Concern was raised that only R80bn of the R300bn has been spend over 3 years.

There was a need to improve the training of pilots, and place emphasis on recruiting rural youth.

1. The Committee noted that there is a need to have a more focused discussion on the dig out port, in terms of the communities affected and the funding model.

    

1.      A concern was raised regarding the slow pace of moving trucks from road to rail.
2.      There is a need to use the port as a catalyst for tourism development.
3.      The Committee noted that there is a need for Transnet to visit the most rural

     youth and schools in KZN for educational opportunities.

1. The Committee acknowledged initiatives such as the training of welders and the

     need for a comprehensive approach to train a pool for the economy. 

1. A concern was raised on incidents of level crossing fatalities in the country and the need to invest time and resources in safety of railway level crossings by building bridges.

    

1. The Committee sought assurance regarding the existence of a good relationship

     with unions. 

 

 

6.         Responses

In response, the leadership of Transnet informed the Committee that there has never been strikes in the last four years, because of the good working relationship with unions. It further informed the Committee that Numsa did not have sufficient members to be recognised, and has been instigating illegal strikes. It conceded that South Africa was underutilising the capabilities and potential of its costal lines. There are initiatives to bring economic activities to rural areas next to the sea through Operation Phakisa. The dig out port funding model has not yet been finalised. The dig out port and the old Durban port will complement each other and increase capacity. It was reported that R200bn of the R300bn will be spent on rail infrastructure to move freight from road to rail. Transnet is paying attention to environmental and community issues. The productivity of the port was slow due to the construction that has been underway at the port.

 

                                                                                                

7. RECOMMENDATIONS

The Committee recommended that the Minister of Public Enterprises should:

7.1    consider introducing specialised schools that will equip young people at secondary

         level with the need to change the education policy to introduce dedicated schools

         specialising in Marine and engineering education.

7.2    ensure that Transnet makes a deliberate effort to promote rural development by          

         ensuring youth in rural communities have access to opportunities.

7.3    ensure that Transnet develops and supports businesses owned by youth, women

         and people with disabilities.

7.4    ensure that Transnet regularly engages with all stakeholders, including the

         government of KZN, the business community and civil society regarding the

         opportunities and how they could collectively participate.

 

 

Report to be considered.