Durban port land deal expected soon
Agreement between state- owned ports and rail group Transnet and the Airports Company SA (Acsa) for the purchase of land earmarked for a R75bn port in Durban is expected by the end of next month
NICKY SMITH
Published:2011/08/23 07:11:04 AM
AN AGREEMENT between state-owned ports and rail group Transnet and the Airports Company SA (Acsa) for the purchase of land earmarked for a R75bn port in Durban is expected by the end of next month. The proposed port will be on the site of the old Durban airport.
"We think that by the end of next month we will know," Department of Transport director-general George Mahlalela said yesterday, referring to how much Transnet would offer Acsa for the land due to be turned into SA’s newest port.
"The discussions are now about how much of the land do we want and what do we want to do with the rest," said Mr Mahlalela, speaking on behalf of the transport ministry, Acsa’s shareholder ministry.
Progress in the negotiations was being hampered by a difference in price expectations between the two companies, complicated by the Public Finance Management Act, which requires each company to behave in its own best interest.
Acsa has reportedly been unwilling to accept anything less than R2bn for the land, though it has officially repeatedly declined to comment on its expectations.
Yesterday, Acsa MD Monhla Hlahla said the Public Finance Management Act would dictate the course to be taken by the operator in the talks. While it was understood that, apart from Transnet, there were at least two more bidders interested in the land, Ms Hlahla declined to provide any details.
Mr Mahlalela said the land could be worth anything from R5bn to R15bn, but because of its location the land was needed by the state for critical economic infrastructure.
"Transnet wants it for development, it’s a strategic piece of land, so you can’t hope to get that price. We can’t really be driven by market valuations," Mr Mahlalela said.
Acsa yesterday reported a net loss of R220,5m, its first in its 18-year history. The loss was largely a result of the operator not being granted the tariff increase it needed to offset borrowings used to upgrade and build new airports in time for last year’s Soccer World Cup.
Acsa has spent about R19bn over the past four years on airports, with R6,7bn being ploughed into the new King Shaka International Airport in Durban. Acsa was not a strong proponent of this airport, largely seen as having been built a decade earlier than required to handle projected air traffic volumes.
Last year Acsa applied for a 190% tariff increase covering a five-year tariff cycle. When this was not granted, the operator took the economic regulator to court and has since been granted an increase of 161% for the period in question.
The increase has outraged the International Air Travel Association (Iata) and the Airlines Association of Southern Africa. Tariffs will rise by 70% on October 1. The associations have warned that these increases will damage their industry.
Priscilla Mabelane, Acsa’s departing financial director, said posting a loss in a regulated economic framework "is unheard of". Passenger volumes rose 6% to 17,5-million, due to arrivals for the World Cup. Revenue rose 32% to R4,6bn.
smithn@bdfm.co.za
http://www.businessday.co.za/articles/Content.aspx?id=151353