Philippines-based International Container Terminal Services Incorporated (ICTSI), selected by Transnet as the preferred bidder for the management of Durban Pier 2 Terminal (DCT2), is taking the decision to halt the deal between it and the freight and rail group on review.
The company said on Tuesday it would explore all legal options available to ensure the losing bidder Maersk does not “hold the people of SA to ransom”.
“As part of the operating contract, ICTSI is committed to pay Transnet more than R11bn upfront and to upgrade the terminal’s capacity and productivity significantly, and in so doing ensure the SA government’s commitment to improving port performance would be realised,” said Hans-Ole Madsen, regional head for Europe, Middle East and Africa at ICTSI.
“The Durban container port is absolutely critical to the sustainability of key industries in SA, and if there are no significant improvements in its functioning, SA exporters are at severe risk, as are the providers of hinterland cargo and related services, many of whom will and have already begun relocating to ports in Walvis Bay or Maputo.
We have enormous respect for, and faith in, the SA judiciary and are taking the high court’s decision to halt the ICTSI contract with an interdict on review.
— Hans-Ole Madsen, ICTSI regional head for Europe, Middle East and Africa
“We have enormous respect for, and faith in, the SA judiciary and are taking the high court’s decision to halt the ICTSI contract with an interdict on review. We will use all legal channels to make sure Maersk is not successful in holding the Durban port, and the SA economy, hostage to their interests.”
Last month, the high court in Durban interdicted the 25-year contract entered into between ICTSI and Transnet after a legal challenge by Maersk’s subsidiary, APM Terminals. That was after judge Robin Mossop found the approach of Transnet in identifying ICTSI as the preferred bidder “was potentially flawed and prima facie unfair to the other bidders”.
The challenge brought by APM is centred on Transnet’s decision to allow ICTSI to use its market capitalisation to meet the tender’s solvency requirements. The decision, which inflated ICTSI’s solvency from 0.24 to the required 0.4, was made despite internal and expert advice warnings against it.
ICTSI was the only bidder that used its market value to calculate its solvency. Madsen said the procurement process was above board.
“The qualification rules were clear: Transnet could evaluate the bidders in whatever way was in line with the law and met the public interest, and ICTSI, as one of the largest terminal operators in the world, more than met the requirements.
“The legal proceedings have caused a delay of possibly years in the implementation of a pioneering public/private partnership at SA’s largest port. Maersk’s decision to have taken the matter on legal review, more than nine months after the selection of ICTSI, places the future growth of the SA economy in jeopardy.”
ICTSI’s financial offer was almost R2bn more than the next best offer made by APM.
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