Friday, February 23, 2024

Namibia Ports Authority settles on Swiss firm to run new container terminal

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[divider style=”solid” top=”25″ bottom=”25″][dropcap]T[/dropcap]he Namibia Ports Authority (Namport) has settled on Swiss-based container terminal operator Terminal Investment Limited (TIL), as the preferred bidder to run the port utility’s new N$4 billion container terminal.

TIL’s majority stakeholder is Mediterranean Shipping Company, owned by the Italian Aponte-family, which is the largest shipping line in the world by container capacity.

Friday’s announcement follows an in-principle decision to concession the container terminal, and to issue a request for proposal in April this year to five candidates who responded to an expression of interest issued by the Namibia Investment Promotion and Development Board last year.

Namport CEO Andrew Kanime explained that this request for proposal closed on 29 July, and two bids were received from the five candidates. An extensive process of evaluating these bids concluded with the approval of TIL as preferred bidder.

TIL has interests in more than 60 terminals in 31 countries across five continents, and handles at least 60 million container units every year. The Namibian understands that the company operates two ports in west Africa, and that South Africa is pursuing a similar process as Namibia to acquire TIL’s services to handle its Durban harbour, among others.

“We are happy with the business case proposed by TIL and are confident that this is aligned to the fundamental objectives we have set for the concession of the new container terminal,” said Kanime. “If anything, they have exceeded our term expectations.”

He explained that the next stage of the process will be to start negotiations between Namport and TIL on the concession agreement, focusing on the detailed operational matters including, the exact terms and conditions of the personnel to be taken over by the operator.

Kanime says this will culminate in the signing of the concession agreement and the handover of the cargo handling operations to the concessionaire possibly by the first quarter of 2023.

One of the key reasons for the introduction of a private operator was the need to increase the throughput of containers and transshipment volumes through the port of Walvis Bay.

While the new terminal’s (which was inaugurated in 2019) container handling capacity increased Namport’s overall container handling capacity by 750 000 units per year, only about 168 750 units a year have been handled to date, representing a very low capacity utilisation of 23%.

Kanime explained that it was critical that this asset needs to be utilised properly to earn a good return on investment.

“Unfortunately, the local volumes of imports and exports are restrictively low given Namibia’s small captive market,” Kanime noted, adding that an independent operator can drive volume growth, especially for the versatile transshipment business stream which can be a “game changer” for Namport volumes.

The operator will also be able to maximise capital investment, through enhancing its operational efficiency which is a critical factor in attracting new business volumes to the new container terminal. This investment will include the widening and deepening of the channel to accommodate bigger vessels.

Employment preservation was also a key consideration, and according to Kanime, the level of utilisation of the container terminal at only 23% “is not good for business and represents a real threat to employment levels given the very low margin of safety”.

“Any decrease in current volumes can spell serious negative outcomes for the overall business case of the new container terminal, hence the need to mitigate this risk by targeting the growth of business volumes sufficient to provide healthy margins and guarantee employment,” he said.

Kanime concluded that all the objectives of the concession exercise will be solidified in the concession agreement with penalties set for the non-attainment of the set and agreed performance and volume targets.

“We are confident that the concession of the new container terminal places us on a strong path to achieving our ultimate goal to generate the best value for our shareholders and to be the best performing sea port in Africa,” he concluded.

The move has increased the handling capacity of the Port of Walvis Bay from 350,000 twenty-foot equivalent units (TEU) to 750,000 TEU a year.

Groundbreaking of the new container terminal was held in May 2014. Construction began in mid-2014 and was completed in August 2019.

Before expansion, Walvis Bay port handled approximately 3,000 vessels and five million tonnes of cargo a year. It manages container imports, exports, transhipments, and transportation of bulk and break-bulk cargos of various commodities.

Constructed on 40 hectares of land reclaimed from the ocean as part of a nearly $300 million project, the expansion has steered  Walvis Bay towards becoming a logistics hub for southern Africa that aims to meet the growing demand for freight ,while promoting new maritime access to serve the landlocked countries of the Southern Africa Development Community (SADC). The African Development Bank provided a ZAR 2,982 million loan representing over 70% of the project funding.

The works included the dredging over 3.9 million cubic metres of sand, used partly for the reclamation, construction of a 600-metre quay wall, the laying of 304,000 square metres of paved surface and the construction of a workshop and administrative buildings. It also entailed the installation of four ship-to-shore (STS) cranes, the construction of a one-kilometre road, the laying of 2.3 km of rail lines, and the installation of service networks. The facility’s electricity supply was also successfully upgraded.

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