By Lehlohonolo Lehana.
State owned rail agency Transnet welcomes the judgement of the KwaZulu-Natal High Court which dismissed APM Terminals’ application to set aside the selection of an equity partner for the Durban Container Terminal (DCT) Pier 2.
In July 2023, Transnet selected International Container Terminal Services, Inc (ICTSI) as the preferred bidder for a 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade the terminal, with due diligence confirming the entity’s financial viability.
DCT Pier 2 handles 72% of the Port of Durban’s throughput and 46% of South Africa’s container volumes.
APM Terminals, which is part of the AP Moller-Maersk Group, subsequently challenged the selection legally.
It argued that ICTSI had failed to meet a prequalification tender stipulation requiring bidders to establish a solvency ratio equal to or exceeding 0.4, using the formula of total equity over total assets.
ICTSI had instead assured Transnet of its solvency by using its market capitalisation as the numerator.
ICTSI was nevertheless shortlisted to bid and its offer of R11.1-billion scored the highest, and was subsequently named as the preferred bidder. APM Terminals ranked second with a bid of R9.2-billion.
In his ruling, Judge Mahendra Chetty found that APM Terminals had delayed unreasonably in launching its review application and that Transnet’s decision in awarding the contract for the operation of DCT Pier 2 to ICTSI did not fall foul of the tender provisions.
ICTSI regional head Hans-Ole Madsen said that, with the judgment, the long-awaited public-private partnership at DCT could “finally be implemented”.
“We now stand ready and look forward to working with Transnet at the Durban Container Terminal and [with] the importers and exporters who rely on South Africa’s busiest container terminal, to make a range of operational improvements for the betterment of all stakeholders and the South African economy,” Madsen said in a statement.
Transnet CEO Michelle Phillips argued that the ruling confirmed the integrity and transparency of its procurement processes and removed a major hurdle to the implementation of the transaction.
“We can now focus all our energy on executing our plan to modernise and expand DCT Pier 2,” Phillips added.
“It is unfortunate that our endeavours to stimulate investments at DCT have been delayed. We hope that this unwanted delay is an isolated incident that will not set a precedent for future obstacles, particularly as we move forward with vital PSP transactions.”