New SBM likely for Durban as clarity provided on Island View Precinct

Minister provides certainty for Island View Precinct

SOUTH AFRICA: After the Transnet National Ports Authority (TNPA) appointed a transaction advisor to validate the Island View Precinct Strategy and Implementation Plan in November last year, the Minister of Transport has now instructed the authority to simply renew all existing leases and given the Central Energy Fund (CEF) permission to build and operate a new Single Buoy Mooring (SBM) in the Port of Durban.

In addition, as part of Minister Barbara Creecy’s directive to TNPA, the Central Energy Fund (CEF) has been granted guaranteed access to the existing terminal Infrastructure within the port limits, including marine and landside infrastructure for landing, exporting, and evacuating cargo.

The Directive, issued in terms of Section 79 of the National Ports Act No. 12 of 2005, renews the leases of Bidvest Tank Terminal, H&R South Africa, Chemoleo, UNICO TEC, Astron Energy, Vopak Terminal Durban, Engen, Total Energies, SAPREF and Sasol.These entities now have the rights to operate liquid bulk terminals and manufacturing sites in the Island View precinct for a period of twenty-five (25) years.

It is foreseen that the CEF’s initial allocated 15% capacity in the precinct could be increased to up to 30% over time. The initial allocation will be reviewed periodically as significant milestones are reached, and use of existing allocated capacity reaches 90%.

The CEF will also act as a third-party access point for emerging black players who were previously limited by a lack of access to Island View infrastructure.

Minister Barbara Creecy has further granted Central Energy Fund to build and operate a new Single Buoy Mooring (SBM) within the port limits in the Port Durban to further entrench access for the new South African National Petroleum Company (SANPC).

“In my view, renewing leases at the Port of Durban Island View will ensure fuel supply security for South Africa, provide certainty to tenants, and encourage long-term investment in the infrastructure. Bringing new players into the industry will not only expand participation but also ensure that all South Africans have a stake in the port operations.” said Minister Creecy, who has instructed TNPA and the lessees to establish a framework governing third-party access to storage capacity within the precinct.

Creecy wants this framework to ensure transparency of excess storage capacity and facilitate the allocation of specific dedicated capacity to support the entry of new market participants, in compliance with the regulations of the National Energy Regulator of South Africa (NERSA).

“This initiative attempts to achieve two important policy objectives: on the one hand to ensure transformation of the sector dominated for decades by well-established players. On the other hand, the decision aims to ensure ongoing fuel security by ensuring that third party access is managed in a well-regulated and incremental manner that ensures consistent usage of the Island View infrastructure,” said Minister Creecy.

According to the directive, TNPA will have to conclude new Terminal Operator Agreements with the entities by the end of March next year. These agreements will need to stipulate the establishment and implementation of training and incubation programmes aimed at transferring technical skills to foster empowerment and transformation in the sector.

They will also stipulate the requirement to undertaken capital investment aimed at efficiency as well as the transfer of terminal infrastructure ownership back to the TNPA at the end of a 25-year period.

It is not clear whether the Minister’s directive is a result of input from the transaction advisors, Zutari or whether she has simply decided that clarifying action was required to bring an end to the uncertainty relating to the precinct.

The only official documents that relate to the awarding of a contract to Zutari specify one that was awarded at a cost of R4,3 million for the company to undertake a revaluation of all port infrastructure assets and services within TNPA for a period of three years towards the beginning of last year.

This latest directive follows on a similar instruction to TNPA to renew a 25-year lease for Astron Energy on loading arms for import and export through the Astron energy operated Joint bunkering Services at its existing sites and terminal at the Port of Cape Town.