President Cyril Ramaphosa, together with Minister of Public Enterprises Pravin Gordhan and Minister of Transport Fikile Mbalula, announced on 22 June 2021 the establishment of the National Ports Authority as an independent, wholly-owned subsidiary of Transnet in terms of the National Ports Act, 12 of 2005.
North-West University (NWU) academic and transport economics expert, Ofentse Mokwena, comments on what the partial independence of the Transnet National Ports Authority means.
“South Africa entered 2020 under difficult economic circumstances which included both a technical recession and a rising unemployment rate.
“When the Covid-19 pandemic struck, the country faced the need to save lives through closing businesses which affected livelihoods and induced a deeper recession,” says Ofentse.
“However, since 2018, both the National Treasury and the South African Reserve Bank have indicated there is a need to fix the causes of our economic struggles and perpetual recessions before the damage is irreversible.”
According to Ofentse, one of the solutions has been to open state-owned enterprises to increased competition from the private sector, without transferring ownership of state assets. This means that there is also a need to separate infrastructure from operations.
“The state will continue to own the infrastructure but will permit public and private sector operators to use the infrastructure to compete for customers at a fee. This is usually termed ‘open access’ or ‘marketisation’, which involves opening the market to private sector participation through changing the way in which a business operates,” he explains.
Ofentse says one such example is the recent announcement that the Transnet National Ports Authority will become a subsidiary of Transnet Ltd., with its own board and being partially independent.
“The purpose of this transition is to introduce greater independence regarding investment decisions at the ports and to reduce the chances of cross-subsidisation between Transnet Ltd. divisions.
He says this comes at a time when the ports are anticipating more than R100 billion in infrastructure investment over the next two decades.
“Having an independent Transnet Ports Authority can help in a number of ways to channel private capital to reinforce public investments – especially when credit ratings and investments assessments are made independent of Transnet’s ratings,” he adds.
Ofentse says for the general public this means a more competitive port environment, with even greater private sector participation, and potentially lower costs and increased efficiencies in the long run.
“This will affect South Africa’s import and export capacity, and place upward pressure on our port performance compared to our recently improved regional and highly competitive international counterparts.
“There will be little immediate effects for the general public, but the long-term implications for South Africa’s industrial, employment and logistics efficiency goals will support our 2030 to 2040 ambitions,” Ofentse concludes.
Ofentse Mokwena.
