Extension of the Port of Cape Town

  Context

South Africa's main contributor to its competitiveness on the international markets is its transport sector.  The main shipping routes run along the coast of South Africa in the South Atlantic and Indian Oceans, making the Port of Cape Town, in the south-western part of the country, a key entry point for trade between South Africa and its partners in Southern Africa.  The white paper on the national policy for commercial ports, drafted by the South African government in 2002, stresses the importance of encouraging investment in port infrastructure to improve security, reliability, quality and speed of port operations and user access to port facilities.  Investments must serve the economy in a sustained manner with respect to the environment, including promoting intermodal freight transport systems.

The South African government's policy for commercial ports is designed to support investment in ports, allowing them to operate with a level of efficiency that compares with international standards.  In South Africa the organisation mainly responsible for the operation of rail freight transport, pipelines and ports is Transnet Limited, a company owned 100% by the South African government.  After successfully completing a restructuring plan between 2004 and 2008 that refocuses its activities on its main area of business and on increasing its profitability, Transnet has launched a large investment programme of approximately € 7.3 billion over 5 years, of which € 2 billion is allocated to port activities.  Part of this programme is the expansion of the container terminal at the Port of Cape Town to the amount of € 327 million.

In the current international financial crisis, the AFD [Agence Francaise de Développement] has a mandate to support South Africa's growth at this critical juncture: through long term loans, it helps to reduce the cash deficit, enabling key players to achieve their economic development strategy.  In line with Transnet’s strategy of diversifying its sources of financing, turning to international financial institutions and export credit agencies, AFD is in discussion with Transnet in this regard. AFD board has agreed on 5 November 2009 to grant Transnet a € 200 million Credit Facility (Approx. ZAR2.2 bn) over 15 years including a 3-year grace period.
 

Objectives

The project's purpose is to contribute to the improvement of the South African economy's competitiveness by extending the Port of Cape Town.  To this end, the project will allow for:

  • a threefold increase in the size of the container ships that the port can accommodate;
  • a significant increase in its capacity for storing and handling containers;
  • an increase of over 30% in the volume of containerised cargo.

 

Project description

The project consists of expanding the container terminal at the port through a series of works:

  • dredging to deepen the access channel and the container terminal dock;
  • underpinning of the terminal docks;
  • the improvement and reconfiguration of storage areas and land access;
  • the purchase of handling equipment including wharf and yard gantry cranes.


Impacts

The project helps support trade outside the Cape Town area, in particular export of agricultural export activities, thus preventing bottlenecks. The project is economically viable for the national community and its financial return for Transnet is significant (about 15%).

Furthermore, following a reduction of the front end fee, Transnet has contractually agreed with AFD to provide a two point two million Rands financial support for the fight against HIV in the Cape Town region and more especially around the port.

 

Dates and amount

Work began in January 2008, with completion expected in 2012.
The total cost of the project is around € 327 million

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Last update in January 2011