Cape Town: The Department of Trade and Industry (dti) reacted fast to the news Transnet National Ports Authority’s (TNPA’s) intransigence had cost this country a multi-million rand investment into the port at Saldanha Bay. United African Lines planned to establish an oil and gas service repair facility there to provide maintenance services to oil rigs used up Africa’s west coast. It pulled the plug on the deal after 16 months of negotiations failed to yield a satisfactory deal.
Trade and Industry Minister Rob Davies dispatched a high level team to engage with the TNPA the minute news of the failed deal reached the department. “The basis of this engagement lies in our industrial policy [Industrial Policy Action Plan 2],” he says. “The oil and gas sector was identified as a priority sector with the ability to contribute to job creation and SA’s industrial development.”
The Western Cape’s oil and gas sector programme was elevated into a national programme. That’s because the sector also provides opportunities in either Richards Bay or Durban to provide services to Mozambique’s gas industry, Davies says.
Translating policy into action is never easy. But it is almost impossible when the players are not all pulling in the same direction. “Ports authorities do not see this [upgrading infrastructure and attracting new business] as their core business,” he says. “This is not a problem unique to South Africa.”
But companies like UAL help to create jobs and drive industrial development in SA. “Dti has been engaging with them [TNPA] on this. I believe we now have a good working understanding. We are working on a mindset change. In some countries the ports authorities waive the dry dock fees because they are so focused on attracting business to their ports. We are not there. But I think we are starting to see some change.”
Whether this new understanding has come in time to salvage the UAL deal remains to be seen. “We need to make it clear that we are serious about this industry. Dti has a task team that is working on this project,” Davies says.
One of its jobs is to speed up the process of declaring Saldanha SA’s fifth industrial development zone. The feasibility study has been completed and public comments are now being incorporated into the plan. Once the Dti is satisfied with the business plan it must be approved by cabinet. “Our role is to ensure the feasibility study for the proclamation of Saldanha is favourable and is completed speedily. Most of the studies to date suggest it is favourable,” Davies says.
While Saldanha’s location is undeniably ideal and the benefits that will accrue once it has been proclaimed an IDZ attractive, business also has to weigh up the opportunity cost of waiting for these processes to be completed. In UAL’s case it had decided to cut its losses and explore opportunities in Namibia and Mozambique.
TNPA CEO Tau Morwe said the company was “pulling out all the stops” to attract business to Saldanha’s oil and gas services hub. Now the TNPA and the Dti are waiting to hear whether they have done enough to win UAL back.
