Court decision delays revamp of Durban container port

Preferred bidder ICTSI has lost its appeal against an earlier court decision interdicting the partial privatisation of Durban container terminal.

Filipino port operator International Container Terminal Services Inc (ICTSI) will have to wait till March 2025 to see if it can take over management of the Durban container port.

The Durban High Court this week dismissed its appeal against an order granted by the same court in October preventing Transnet from implementing the partial privatisation of the Durban Container Terminal Pier 2 that would see ICTSI acquire 49% of the terminal, with Transnet retaining the majority share.

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Read/listen:
Durban port: Court interdicts Transnet-Filipino deal
ICTSI to take Durban Port court interdict on review
Filipino ports giant ICTSI fights for its Durban port deal

The contract to run the port is for 25 years and would see ICTSI invest about R11 billion in new equipment and upgrades.

Basis of the case

That case was brought by losing bidder APM Terminals, part of Danish shipping company AP Moller-Maersk, which claimed the tender was full of irregularities, not least of which was a solvency test that allowed ICTSI to use market cap rather than balance sheet equity. 

On this basis, ICTSI cleared the solvency hurdle with ease. All other bidders were measured on balance sheet equity, a much stiffer measure of solvency.

APM argued in its court papers that ICTSI could only manage a solvency ratio of 0.24 against the minimum 0.4 demanded by Transnet when measured on the same basis as other bidders.

Read: Maersk questions ICTSI’s solvency in battle over Durban container port

ICTSI has criticised Maersk for using a non-material technicality to stop the deal from going through, thereby preventing SA from pursuing its economic agenda.

“Delays in setting up a private-public partnership substantially weaken the South African economy and the sooner the country addresses weaknesses at the ports, the better,” said ICTSI in a statement.

“It is unfortunate that arguing over a non-material and non-defined technicality will delay fixing the country’s main container terminal.”

‘Ruling not entirely unexpected’

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The company says the ruling was not entirely unexpected, as Transnet chose not to appeal the October 2024 interdict that places a temporary stop on the deal proceeding. The second part of the same case will be heard in March 2025.

“The agreement to operate the Durban Container Terminal Pier 2 was awarded to ICTSI after a rigorous, transparent, and fair bidding process in 2023 and was interdicted in March 2024,” said ICTSI.

“The interdict was granted against Transnet, stopping the state-owned entity from implementing the private-public partnership pending a full court review next year, making it challenging for ICTSI to be granted leave to appeal the interdict.” 

Read:
Transnet’s privatisation of Durban container port needs a do-over
Has Transnet botched the ‘privatisation’ of the Durban container terminal?

ICTSI added that the denial of leave to appeal was a missed opportunity to rectify errors [in the October ruling] but that the company will continue to vigorously defend its position when the main case is heard in March 2025.

One reason the Durban court dismissed the appeal was that a decision may not be granted by the time the main case is heard in March next year.

Another reason given by Judge Robin Mossop is that interlocutory orders are not appealable. “From its terms, the order is to only endure until such time as Part B of the application has been determined and it is, therefore, temporary in its nature and will only be in place for a limited period.”

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