Choice of Billionaire Razon As South Africa Port Partner Is Challenged

By Antony Sguazzin and Loni Prinsloo

(Bloomberg) –South Africa’s selection of Filipino billionaire Enrique Razon’s harbor firm as a partner to revive sub-Saharan Africa’s biggest container port is being questioned by losing bidders.

Companies that lost out to International Container Terminal Services Inc. for the right to buy almost half of the main container terminal in the southeastern port city of Durban and operate it for 25 years have demanded to know why it won the deal.

“Some of the rival bidders have requested Transnet to provide the basis for the selection of ICTSI as the preferred bidder,” said state-owned Transnet SOC Ltd.,  which operates all the main ports and freight-rail system. “The company is in the process of responding to any requests for information.”

A challenge from a rival bidder would present another obstacle to what’s expected to be South Africa’s first port privatization. Labor union leaders this week said they’ve demanded that ICTSI agree not to cut any jobs for the duration of the 25-year contract and that they don’t expect their demand to be accepted. 

Transnet has said there were six bidders at the final stage. In an August 2022 statement, Transnet said 10 bidders had been short-listed. 

APM Terminals BV, Cosco Shipping Ports Ltd., DP World Ltd. and Global Port Services Ltd. were among those that submitted bids. 

China Harbour Co. Engineering Ltd. submitted a joint bid with Guangzhou Port Co. Ltd. and Grindrod Freight Services Ltd. teamed up with Hamburger Hafen Und Logistik AG. Red Sea Gateway Terminal bid together with MMC Port Holdings Sdn Bhd., while Star Classic Investments Ltd. bid with Abu Dhabi Ports and Remgro Ltd. joined up with Terminal Investment Ltd.

Under the agreement, ICTSI will pay an undisclosed amount for almost half of Durban Container Terminal Pier 2 and help expand the facility, which accounts for three-quarters of the volumes that passes through the port and 46% of the nation’s total port traffic.

In a 2022 World Bank index of container-port performance, Durban ranked 341st out of 348. Two other Transnet harbors were also in the bottom 11. 

ICTSI operates terminals across six continents.

© 2024 Bloomberg L.P.

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