South Africa’s port infrastructure is being developed to accommodate the offshore oil and gas industry. Operation Phakisa, which was launched in mid-2014, provides an aggressive set of timelines to position the country’s ports as premium destinations for rig and offshore support vessel repairs and maintenance. South African ports remain well-placed to provide other oil and gas related services to the growing industry on the east and west coasts of Africa.
There is a real opportunity for South Africa to leverage its infrastructure, location, expertise and existing downstream industry to create permanent hubs to service the African oil and gas industry.
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SOUTH AFRICAN PORTS - AN OVERVIEW
South Africa’s eight commercial ports all offer facilities for ship or boat repair and maintenance, but Saldanha Bay, Cape Town, Durban and Ngqura currently present the best options to support the needs of the offshore sector. Aggressive plans to further develop facilities in Saldanha Bay and Richards Bay will see these ports become destinations of choice for rigs, jack-ups and related vessels in future.
The South African ports can accommodate the following, via available facilities to varying degrees:
- Floating or wet repairs: in the bay
- Quayside repairs: some multi-purpose terminals, repair quays
- Dry repairs: drydocks, floating docks, syncrolifts, slipways
Current capacity constraints based on available facilities are being addressed by new infrastructure
developments primarily under Operation Phakisa initiatives.
The launch of Operation Phakisa by the State President in July 2014 resulted in an analysis of the
economic potential of South Africa’s oceans. Operation Phakisa’s main objective was to assess how
the oceans’ economy can contribute to increased GDP growth and increased employment within the
marine transport and manufacturing sector, aligned to the priorities of the National Development
The recommendations highlighted the opportunity for South Africa to achieve GDP growth and job
creation by pursuing the development of new port repair facilities and ensuring that existing repair
facilities are maintained to promote further growth in the vessel repair market. Operation Phakisa’s
recommendations strongly underlined and supported the role of Transnet National Ports Authority
(TNPA) as set out in Section 11 of the National Ports Act 12 of 2005, which indicates that TNPA must
plan, provide, maintain and improve port infrastructure.
Operation Phakisa also demonstrated that growth within the oceans’ economy cannot be realised
unless the proposed new port facilities are delivered as integrated Industry solutions, with strong
partnerships between the ports, IDZ’s and the repair Industry.
TNPA is committed to the delivery of Operation Phakisa. To deliver Operation Phakisa, new vessel
repair facility opportunities will be pursued at the ports of Saldanha Bay, Richards Bay and East
London, whilst maintenance and refurbishment of existing vessel repair facilities have been prioritised
at the ports of Durban, East London, Port Elizabeth, Mossel Bay and Cape Town.
The repair facilities to be established at the Port of Saldanha, aimed to position the port as an
offshore oil and gas services complex with dedicated rig and other vessel repair capabilities, will be
developed and aligned with the Saldanha Bay Industrial Development Zone (SBIDZ). The SBIDZ has
already attracted global interest and will provide land-based facilities to support offshore operations
in terms of logistics, equipment servicing, rig repair and fabrication, as well as companies interested
in dedicated infrastructure and quayside access for vessel fabrication, logistics and repairs.
Operation Phakisa will create opportunities for the private sector to invest in port facilities. The
investment in new facilities has been projected at R13 billion, to support both the oil and gas industry
and expanding marine manufacturing within ports. Growth and development of the South African
oceans’ economy can only be realised by ensuring capacity at the South African ports; and execution
and delivery of Operation Phakisa will position the country to capture its share of these economic
Port Initiatives under Operation Phakisa
OFFSHORE OIL AND GAS SUPPLY BASE: Development and extension of the General Maintenance Quay – this facility will be operated as an offshore oil and gas supply
REPAIR FACILITY: The port will pursue the establishment of a vessel repair facility
BOAT-BUILDING HUB: The refurbishment of the slipway and backup area as a boat
MAINTENANCE: Existing repair facilities are located at Durban, East London, Port
PORTS ACT SECTION 56 PROCESS
TNPA is tasked with the responsibility to enter into agreements with any person to allow the design,
construction, rehabilitation, development, financing, maintenance and operation of a port terminal
or port facility. This must be done in accordance with a process that is fair, equitable, transparent,
competitive and cost effective.
The new facilities at the Port of Saldanha, Richards Bay and East London will follow a Section 56
process. The process requires bidders to respond to a request for proposal. Bids are evaluated taking
into account the New Growth Path/Supplier Development/BBBEE criteria as well as the technical fit,
with threshold targets for each of the two stages.
Only if the bid passes the required thresholds, will the financial evaluation be done. Negotiations will
then follow with the successful bidder and an agreement concluded.
SPECIAL ECONOMIC ZONE INCENTIVES
The Department of Trade and Industry (DTI) offers investors in South Africa’s Special Economic Zones
a new set of incentives as listed in the Taxation Laws Amendment Act No. 43 of 2014:
- A 15 percent corporate income tax rate for businesses who qualify and contribute through value-added activities within the zone;
- An employment incentive allowing for a tax deduction for employment of workers earning less than R60,000 per year as per the Employment Incentives Act;
- Accelerated depreciation allowance for buildings in the zones based on the existing rates for urban development zones, to encourage developers to invest in industrial premises; and
- Donation to public-benefit organisations: Currently deductible up to 10 percent of taxable income and current proposal allows donations of more than 10 percent to be rolled over in future years.