Transnet concludes financial due diligence on ICTSI’s Durban Pier 2 deal

Connie Queline

Transnet concludes financial due diligence on ICTSI’s Durban Pier 2 deal

State-owned logistics and port operator Transnet has concluded its financial due diligence into Philippines-based port operator International Container Terminal Services Inc (ICTSI) related to the Durban Container Terminal (DCT) Pier 2 deal. This clears the way for a contract signing – though subject to some non-financial processes required as part of the financial close.

Transnet confirmed this in its latest update on the deal on Friday.

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In July 2023, ICTSI was appointed as the preferred bidder to form a 25-year joint venture with Transnet Port Terminals (TPT) to develop, upgrade and manage DCT Pier 2, which handles 72% of Durban’s port traffic and 46% of SA’s import and export traffic.

ICTSI is the Philippines’s largest multinational company, with operations in 20 countries globally. It is not aligned with any shipping company and is therefore regarded as a neutral operator with a sound reputation in the industry.

The involvement of private sector operators such as ICTSI is seen as crucial to the turnaround of Transnet ports. DCT Pier 2, which saw unprecedented backlogs of vessels at anchorage over the December period, has been able to reduce the backlogs by adding an extra work shift, new gantries and on-site parts and maintenance teams.

A new company will be formed to manage the operations at DCT Pier 2 in which Transnet will have majority ownership of 50% plus one share.

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“The procurement of a private sector partner is set to improve terminal productivity and increase terminal throughput. The partnership will have a positive impact on Transnet, container supply chains and on the competitiveness of South Africa’s economy,” the group said.

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“Durban is South Africa’s main cargo and container port due to its strategic location along international shipping routes,” adds Transnet in a statement.

The port operator said employees will play a crucial role in the partnership with ICTSI and there will be no retrenchments.

The award of the contract is subject to several outstanding legal and regulatory issues, including sign-off from the minister of finance, approval from the Transnet National Ports Authority and the agreement of trade unions.

The conclusion of the partnership is also subject to tax advice and structuring, and negotiations around the terms and conditions of the project agreements.

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