Transnet’s partnership with International Container Terminal Services Inc. (ICTSI) for the Durban Container Terminal Pier 2 remains unresolved, impacting South Africa’s economic potential. Although ICTSI was announced as the preferred bidder nearly two years ago, implementation is stalled due to legal challenges from the losing bidder, Maersk, who seeks to nullify the contract on disputed grounds.

The concession process was competitive and transparent, aligning with ICTSI’s global standards. ICTSI, operating in 32 ports across 19 countries, reported a 15% revenue increase to $2.74 billion for 2024, with net income rising 66% to $849.8 million. Despite these figures, Maersk challenges ICTSI’s financial eligibility based on a contested solvency metric.

The process began with a Request for Interest on August 17, 2021, followed by a Request for Qualification (RFQ) on February 11, 2022. ICTSI, along with other bidders, submitted financial disclosures, including the debated solvency metric, by the RFQ deadline of April 12, 2022.

By August 2022, Transnet had shortlisted ten entities, including ICTSI and Maersk’s APM Terminals. ICTSI’s bid of $618 million surpassed Maersk’s $515 million, scoring 100% on Transnet’s evaluation compared to Maersk’s 83%. Transnet’s Board approved ICTSI on April 11, 2023, reaffirmed by independent consultants GrowthStone, who stated ICTSI is financially robust and capable of enhancing the project.

Maersk lodged an interdict in March 2024, disputing ICTSI’s solvency ratio, although the final decision was made nine months earlier. ICTSI used a market capitalisation-based solvency method, standard in financial evaluations. Maersk’s challenge seeks to impose a different solvency definition, potentially disqualifying even large corporations.

This legal standoff affects South Africa’s trade efficiency. The Durban terminal requires a world-class operator for improved competitiveness. Unlike Maersk, ICTSI is not vertically integrated, ensuring impartial service to all shipping lines. Delays in resolving this dispute hinder necessary terminal upgrades, risking R2 billion in investment if Maersk’s bid prevails.

Source: IOL