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Economic Participation Review Paper

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Question One

The office of the Ports Regulator of South Africa (PRSA) has called for a review of economic participation in the provision of port functions, operations and services in the South African port system. The proposed scope of work, among other areas, calls for the successful consultants to make recommendations concerning “the optimal economic structure for future participation in port operations and services by public entities … (and) private entities…”.

The consulting company in which you are employed as a port economics researcher, asks that you provide a concise advisory note of no more than 6-7 pages to assist the consulting company to put together an expression of interest to tender for this work. In particular, your principals ask that you provide summary advice as to the optimal role for public or private provision in the following areas:

  1. The provision of basic marine infrastructure (port approaches, fairways, entrance channels, breakwaters, internal port channels, turning basins and the like), including the provision of heavy marine infrastructure in potential new port sites, such as the planned Durban Dig-out Port or DDOP;
  2. The provision of berthing infrastructure and quay walls, both in respect of common-user berths for general/container cargoes (to service the broad liner trades) and in respect of berths used for specific dry-bulk or liquid-bulk cargoes;
  3. The provision of marine services, such as tug and pilotage services;
  4. The provision of cargo-handling superstructure, such container gantries, container stacking areas, bulk-handling equipment, cargo sheds, storage areas and the like;
  5. The provision of cargo-handling or terminal-handling services, such as stevedoring and cargo distribution.

In each of these cases, you are required to provide a reasoned, principled economic basis for the advice you provide. That advice may also include, where appropriate, brief comment as the need for independent regulation of certain operations within the range of port functions.

It would also be useful to conclude your advisory note to your principals with a brief summary statement as to where you would see the current arrangements in the South African ports as conforming to the optimal interfaces you identify, or as not conforming to best-practice norms.

                                                                                                                        (60 marks)

P T O for Question 2 and a short bonus question

Question 2

Question 2 (a)

For a country such as South Africa, with a high degree of both general cargo-related and bulk cargo-related port activity, and with a system of largely complementary as opposed to competing ports, would you see the South African ports as best served as Landlord ports or as comprehensive port authority-operated ports, and why? Further, would you see individual ports within the range of South African commercial ports as best administered locally by municipal port authority structures, or nationally within a single countrywide port authority structure, and again why? If the South African ports were to change their essentially complementary roles, to establish a higher degree of inter-port competition, would your view as to optimal port authority arrangements change, and if so why (or why not)?

(I am looking here for reasonably full, nuanced discussion of the respective port management arrangements, their strengths and their weaknesses, but with obvious application to South African ports reality.)

                                                                                                                        (30 marks) 

Question 2 (b)

After very considerable delays, a decision to develop a second “dig out” port in the eThekwini area is finally given the green light. In your view, might it be either formally possible, or indeed desirable, to administer this second port as a municipal or city port facility, in which both investment and operational decisions are taken at a local level by a local port authority entity?  Please provide brief reasons for your answer.

                                                                                                                          (4 marks)

Question 2 (c)

Since 2002, when the previously monolithic “Portnet” was split into a separate Ports Authority (now styled as the Transnet National Ports Authority or TNPA) and a public sector port operator (now styled as Transnet Port Terminals or TPT), Transnet has described the South African ports as “Landlord ports”. In your view, is it appropriate to view the South African ports as genuine Landlord ports? Give reasons for your argument and answer.

                                                                                                                          (6 marks)

…and a short bonus question…

The National Ports Act (Act no 12 of 2005), which came into effect in South Africa from early-2006, contains the peremptory directive that the relevant Minister (the Minister of Public Enterprises), “must” see to the removal of the National Ports Authority from the Transnet family of entities, and to its establishment as a separate, independent entity outside Transnet but still within the public sector. To date, the relevant Ministers have not carried out this directive, and the National Ports Authority remains within Transnet. Why in your view, has this separation not taken place, and to what extent would you see the independent establishment of a Ports Authority outside Transnet as desirable or undesirable? Give reasons for your answer.

                                                                                                                        (10 marks)

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