Funding for Durban dig-out port uncertain

The big question is how much the new port is going to cost and how this is going to be funded.

"The planning at this stage is that if the proposed dig-out port goes ahead, construction will start in 2016 and the first phase will ready by 2020," says Marc Descoins, Transnet's programme director for the proposed new port. "That will cost betweem R35bn and R40bn, in today's money."

However, that is only the first phase. There are four phases to the project, which once complete in 2040 could cost as much as R100bn. Inflation, local economic conditions and export demand could all affect the final price.

"The final cost could vary, up or down," says Descoins.

If the total cost comes to R100bn, it is not part of Transnet's R300bn infrastructural budget under the revitalisation plan for the next seven years.

Much of the funding will have to come from the private sector. Transnet's chief executive Brian Molefe made that clear in Durban last week. "We are looking at the option of partnerships and we are looking at a build, operate and transfer model. At the moment we are testing expressions of interest," he told a meeting with local community members.

But just how private-sector investment will be catered for is not clear. Transnet says it will own the land, so it seems a profit-sharing formula will have to be worked out for private-sector investors.

"We are looking at a number of different funding models but nothing has been decided. There are seven different work streams, one of which is funding." Descoins says he cannot name any private investors Molefe might have been talking to.

Given the long-term nature of the project, a degree of vagueness is understandable. More clarity is expected when phase one construction is commissioned in 2020.

Source: Financial Mail via I-Net Bridge