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Is Operation Phakisa failing the ship repair sector?
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Is Operation Phakisa failing the ship repair sector?

Slow progress on maintenance of facilities thwarts ship repair sector

Hailed as an industry capable of delivering much-needed jobs to the South African economy, the ship repair and marine engineering sector has in reality shed hundreds of jobs and seen the demise of one of the country’s largest ship repair companies during the five years since the launch of Operation Phakisa – an initiative that was developed to focus on identifying and solving challenges in a number of maritime sectors including this one.   


By Colleen Jacka, Editor of Maritime Review Africa 


It is half a decade since the high-level launch of Operation Phakisa in July 2014, but the delivery of promises made to the ship repair sector has been dismally low. 

In February 2015, we published an article that focused on whether this initiative could provide a much-needed lifeline to the country’s marine engineering sector. The very first sentence of the article asked whether the newly announced strategy for the ocean economy would effectively provide the requested and long-required action to resolve some of the ship repair facility maintenance issues - or simply evolve into a talk shop of deferred promises. 

While the global economic downturn can shoulder some of the blame for lack of, or delay in, delivery of infrastructure maintenance as well as the new development itemised in the initial plan; the seeming lack of commitment to meet these projected timelines continues to frustrate the industry. And it is a frustration that has had significant economic consequences.  More than one industry source confirms that potential work has been turned away as a direct result of inadequate infrastructure availability. 

Lost momentum on maintenance 

A quick glance in the direction of the original timelines of Operation Phakisa associated with addressing the ship repair infrastructure under the management of Transnet National Ports Authority (TNPA), shows that much of the maintenance and refurbishment projects identified should have been completed or well-progressed by now. Commonly referred to as Initiative 5: Maintain and refurbish existing facilities – many of these items have long been the bugbear of the industry. 

At the time of our article in 2015, a meeting had provided the industry with the opportunity to highlight to TNPA that even these original timelines needed to be addressed. “The concerns expressed are that the execution timelines are currently too long and that the order of priority will need a reshuffle from an industry perspective,” one stakeholder commented at the time.

In its submission to the Operation Phakisa launchpad, The Department of Trade and Industry (DTI) noted that there is “low revenue prioritisation of marine manufacturing within the current (2014) Transnet Market Demand Strategy” and that there was a need to do align Transnet corporate plans with the needs of this sector. 

Given this perspective from more than four years ago, the latest update on Operation Phakisa for Initiative 5, paints a very disturbing picture. Only about one-third of the projects have been completed and many have had deadlines pushed out to 2021 and 2022. 

“Operation Phakisa Initiatives in the Port of Durban tend to lag reality.  The original initiative was to repair what was dysfunctional and propose purpose-built new infrastructure, but unfortunately, management rotation, throughput, and Transnet budget approvals have delayed many of the bright ideas and initiatives,“ notes an industry source from KwaZulu Natal.

TNPA has presented revised timelines to the industry during the course of 2019 at various stakeholder meetings citing decreased number of vessels calling at ports and the recalculated projections for the country’s economic growth potential as reasons for the shift in timelines.  

“The South African Association of Ship Repairers is keeping a close track on the progress. Our two driving issues are the replacement of all the capstans and new ship cranes (in the drydocks),” says Colin Schreuder, Chairman of the Association.

Cranes kept on a backburner

Indeed, one of the most disheartening reschedules on the Initiative 5 line-up must surely be the replacement of ship repair cranes in the drydocks. While crane operators are smiling at the opportunities that this creates for them, the original timeline saw these being replaced between 2015 and 2018. 

As one of the constant gripes raised at many an industry workshop, the current situation, according to TNPA’s 3 foot plan review of April this year,  indicates that approval for the project (that includes the replacement of cranes in both Durban and Cape Town) will only be finalised by November this year. 

As such a tender is only expected to be issued in January next year with a closing date scheduled for the end of July 2020. The result is that the new equipment will only be in place by the very end of December 2021. 

Despite announcing that 20 new cranes would be purchased back in October 2016, TNPA defends the delay as being as a result of first investigating the option to refurbish the cranes before making the final decision to replace.  

The announcement in 2016 was itself aimed at informing industry that timelines had been realigned, but that TNPA “remain(ed) committed to advancing these projects”. 

In this 2016 press statement, Ricky Bhikraj, Executive Manager for Capacity and Enablement at TNPA and Programme Director of the Authority’s Operation Phakisa programme assured the industry: “We have built in the potential to scale projects up as required.”

Broken promises

The current situation does not appear to bear witness to this potential capacity, however. 

What makes it all the more disturbing is the long history of mediations between industry and TNPA that have been ongoing for at least two decades. During this time the TNPA has behaved much like a belligerent partner – intermittently promising to do better, but not living up to these undertakings. This is despite admitting in one of their presentations that the “current ship repair operating model is not sustainable”.

In November 2004, for example, the Cape Town industry held a two-day workshop under the mediation of Peter Thomas to address concerns. As an outcome, a SWOT analysis was developed, and a ship repair cluster established.  That cluster is now defunct; most of the weaknesses and threats remain, and some of the opportunities and strengths are at risk of being lost.

Fast forward a few years and the industry once again had a carrot of hope dangled in front of them in the form of a proposal from TNPA to privatise the ship repair facilities in all of the ports. By April 2011, the industry was still waiting for a response to their bids and soon thereafter TNPA abandoned the plan altogether. One cannot help but wonder whether the current maintenance programme under Initiative 5 would even be necessary had that proposal succeeded to make maintenance and refurbishment the responsibility of industry. 

One industry observer still believes that this is the way forward. “I am sure that TNPA will have to go this route if the Phakisa development ideals are to be realised. The operation of State-Owned port facilities has run aground,” he said. 

The need to maintain and refurbish existing facilities was highlighted as a “quick win” at the launch of Operation Phakisa and a total public budget of just over R1 bn was identified for work to be undertaken between 2014 and 2019. Although more recent presentations by TNPA highlight that this figure has been reconfigured to R2.7 bn, the added capital has not added impetus to accelerate projects. 

“The Port Authority controls our future as ship repairers in South Africa and as such we are totally reliable on them to provide a facility that is safe, workable and manageable. The new TNPA executive is supporting the ship repair sector with the appointments of a ship repair team to expedite our issues and concerns, however this is not progressing at the speed we would like to see,” says Schreuder. 

Given this current situation it is not surprising to see that the latest update on the Operation Phakisa online dashboard for Marine Transport and Manufacturing (dated 28 June 2019) shows that there has been absolutely no progress made in terms of prioritising Transnet and TNPA’s funding allocation towards marine manufacturing. 

Admittedly the accuracy of the reporting dashboard is questionable given the current score of 88 percent for completion of all projects under Initiative 5.  

Saldanha is slow to the starting blocks 

Well, if the timelines associated with Initiative 5 were deemed unattainable, those associated with new infrastructure development in the Port of Saldanha listed under Initiative 2 of Phakisa, must surely have been conjured from a place of extreme optimism – even at a time when annual economic growth was projected to be six percent. 

Back in 2015, a new jetty at the Mossgas Quay as well as the development of Quay 205 for ship repair in the Port of Saldanha Bay were rather unrealistically mooted to be operational by the beginning of 2018. At the time, industry stakeholders suggested that this was unlikely.

After conducting a feasibility study and undertaking an international roadshow to attract investors in April 2016, feedback highlighted that the appetite for the jetty and quay facilities was weak, but that there was nevertheless interest in the establishment of the offshore supply base (OSSB).

The appetite for this type of development is unlikely to be realised in the short term, but presentations by TNPA indicate that the projects remain on the table for future development when suitable investors will be sought.  

TNPA indicated in a recent presentation that “facilities need to be “bulked up” or become diversified to improve bankability”.

Slightly more traction has been seen in terms of the development of the OSSB in the West Coast port. The contract to develop South Africa’s first OSSB was publicly signed with Saldehco during the first quarter of 2018, but it is as yet unclear when the facility will be fully operational. 

According to Chairperson of Saldehco, Sophie Masipo, however, there are plans to offer some services from the facility before the end of 2019.

“It is our intention to proceed with the introduction of some services within this year, while we engage our counterparts in the (Saldanha Bay) Industrial Development Zone (SBIDZ) on the completion of enabling works and eventual handover of the complete OSSB site,” she told Maritime Review.

She explains that delays in the commencement of construction relate to lease agreement discussions between TNPA and the SBIDZ that resulted in delays in the handover of the area earmarked for development. 

What is clear, however, is that the port could have had a functioning floating dock by now if Dormac had been given the go-ahead while they still occupied premises on the Mossgas Quay. Indeed, according to initial presentations at the Ocean Labs that kickstarted Operation Phakisa in 2014, the industry believed that it was feasible to commission a floating dock off the Mossgas quay by the end of 2016 and the original presentations from Operation Phakisa labs reflect this sentiment. 

In a press conference in 2015, however, TNPA executive Tau Morwe, refuted this saying that there was no appetite for such an investment locally. 

In the interim, Dormac has purchased and commissioned their own floating dock in the Port of Durban where TNPA’s floating facility has been out of service for a number of years. Reports are that Dormac’s new facility has been well-occupied since its commissioning. 

Forward movement on floating docks 

There is some slow movement towards additional floating dock capacity extending the ship repair facilities in the ports of Cape Town, Durban and Richards Bay. 

Durban is investigating the installation of a Panamax floating dock and WSP Engineering have reportedly been appointed as consulting engineers. 

Further north, Richards Bay is planning to install a Post Panamax floating dock and Aurecon has been appointed as design engineers for the quay and dolphins after transaction advisors were appointed in 2015. Here, TNPA has undertaken to fund the dredging and refurbishment of the quayside ahead of concessioning a floating dock. 

Schreuder adds that the industry is also anxious to see an RFP issued for a floating dock facility in the Port of Cape Town. “We need a floating dock and a floating crane in Cape Town,” he says. 

But since these plans have been floating around since at least 2015, industry cannot be blamed for becoming impatient and comparing how effectively floating docks were added to the Port of Walvis Bay’s landscape by the willingness of the Namibian port authorities to simply get things done. 

Hurry up and wait

Hailed as a “results driven” strategy and named after the Sesotho word for “hurry up”, Operation Phakisa was modelled on Malaysia’s Big Fast Results Methodology, which has been adopted by organisations and countries seeking accelerated transformation. 

There is no real analysis of exactly how long these “fast” results should take, but there is a perception that heading into the sixth year of the programme with minimal traction is not a good sign. 

Perhaps most unsettling is a warning in red on one of the original Phakisa presentations which reads: “If SA Inc waited until 2025/26 there would no longer be an industry (marine engineering) – other competitors in Africa would have grabbed our market share”.

 

THIS ARTICLE WAS FIRST PUBLISHED IN OUR JULY/AUGUST ISSUE OF MARITIME REVIEW AFRICA

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