Transnet yesterday said it was evaluating its options following a court ruling, which halted a major partnership deal worth more than R12 billion with the Philippines-based International Container Terminal Services International (ICTSI) for the upgrade, expansion, and operation of Durban’s Container Terminal Two (DCT2).
This comes after the Durban High Court yesterday granted APM Terminals, a subsidiary of the Danish shipping giant Maersk and one of the losing bidders for the contract, partial relief in its challenge against Transnet’s decision.
The interdict prevents Transnet from proceeding with any actions related to the awarded tender, effectively pausing negotiations or the conclusion of any contracts with ICTSI or other parties, until a hearing for Part B of the court challenge can take place.
In a statement, Transnet expressed its acknowledgement of the court’s ruling and reiterated its commitment to the judicial process.
“Transnet is committed to concluding the transaction expeditiously in the interest of economic growth and development,” the company affirmed.
The crux of APM Terminals’ argument lies in claims of special treatment afforded to ICTSI during the tender selection process.
In July last year, Transnet announced ICTSI as the preferred bidder to partner in a 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade the terminal.
The Durban Pier 2 is Transnet’s biggest container terminal, handling 72% of throughput from the Port of Durban as well as 46% of South Africa traffic.
Transnet’s partnership with ICTSI was aimed to help reposition the terminal for best practice performance, ensuring growth in volume throughput, and will support the terminal in providing operational and commercial support to access global shipping line call routes.
It was also aimed to play a significant part in stimulating exports and imports. This is a growth strategy for Transnet where Pier 2’s current capacity of 2 million twenty- foot equivalent units (TEUs) is planned to increase to 2.8m TEUs.
APM alleges that the solvency evaluation of ICTSI was irregular, asserting that the company should have been disqualified by the Request for Quotation (RFQ) stage and not allowed to proceed further.
APM Terminals maintains that its own bid, which proposed approximately R2bn less than ICTSI’s offer—totalling $515 million—should have secured it the right to negotiate the contract with Transnet.
According to the court, the ICTSI bid included a commitment of $618m (approximately R11.1bn) for a minority shareholding in a special purpose vehicle, while APM’s lower bid was deemed insufficient.
The legal proceedings come at a time when efficient port operations are crucial for South Africa’s economic recovery and growth.
The court also instructed Transnet and ICTSI to cover the costs of the application brought by APM Terminals, further complicating the financial implications of the legal battle.
Legal experts noted that for a court to grant an interim interdict, the applicant must exhibit strong prospects of success in the main review—an indication of the court’s assessment that APM Terminals may have valid grounds to contest the awarding of the tender.
Despite this development, Transnet's stance remained firm as it navigates the complexities of both the judicial process and the critical need for the terminal's enhancements to bolster South Africa’s trade efficiency.
BUSINESS REPORT