South Africa’s port doctrine: dilemmas and the way forward

Abstract

This study uses content analyses to examine 137 stakeholders' submissions to the Ports Regulator of South Africa from 2009/ 2010 to 2018/2019, classifying themes into two broad categories, namely port authority pricing and port governance, which together define South Africa's port doctrine. Results show that South Africa's system of eight commercial seaports is unique and is financed and managed using a mix of elements from the Anglo-Saxon and Asian doctrines and attempts to charge port tariffs according to the Anglo-Saxon doctrine. The paper critiques the port authority pricing methodology employed in South Africa and shows its inconsistency with sound pricing principles and global best practices. The governance structure and how it has persistently defied legislation, which served to promote anticompetitive behaviour and at worst accommodated years of corrupt activities that have recently surfaced, are also discussed. The recommendation is a swift incorporation of Transnet National Ports Authority (TNPA) as a stand-alone entity outside of Transnet. Incorporation of TNPA would help to remove the present conflicts of interests, improve transparency, accountability and regulation as well as incentivise improved productivity and infrastructure spending, and attract private investments into the ports system.

Ports regulation in South Africa: An equitable tax rate approach

“…Hence, there may be cross-subsidisation between ports and port users and a sharing of resources between the nine ports. The NPA also controls the licensing of terminal operators, and this has been an issue with some stakeholders that believe there are competition issues and a conflict of interest as the NPA, under Transnet, issues licenses to both private sector terminals and their sister division called Transnet Port Terminals (TPT) (Meyiwa & Chasomeris 2020). Consequently, the NPA makes a single annual tariff submission to the Ports Regulator, using the RR model to calculate the RR for the entire NPA.…”

“…A complex structure with the NPA as a regulated division of an unregulated group, together with consolidated accounting techniques, results in unnecessary complexity and inadequate access to information that could improve port regulation. Indeed, a study by Meyiwa and Chasomeris (2020) used content analyses to examine 137 port stakeholders' submissions from 2009/2010 to 2018/2019. They concluded that the governance structure of the NPA was shown to promote anticompetitive behaviour and they recommend a swift incorporation of the NPA as a stand-alone entity outside of Transnet.…”

“…Several concerns about the RR model have been raised, including that it may 'incentivise unnecessary port capital expenditure (investments)', 'bloat operating expenditure' and set port authority prices at higher 'levels that are not in the best interests of the country's trade competitiveness and economic development objectives' (Chasomeris 2015;Gumede & Chasomeris 2017). In addition, port stakeholders (mainly port users) have complained that the application of the RR model has allowed the NPA to generate excessive profits that are not adequately reinvested into the port infrastructure and marine services but are rather used to subsidise other, less profitable divisions in the Transnet Group (Meyiwa & Chasomeris 2020).…”

“…For example, evidence shows a substantial overvaluation of the NPA regulatory asset base and an unrealistically high asset beta that assumed the NPA to be a higher-risk entity than it actually is under regulation. Such issues have resulted in higher prices to port users and higher revenues and profits to the NPA (Chasomeris 2015;Meyiwa & Chasomeris 2020). This article continues the constructive critique of the RR model and focuses on the treatment of tax in the RR model (a form of rate of return regulation).…”

Port Governance and Cruise Tourism

“…Improved performance and competitiveness of ports are also part of stakeholder challenges, which require a configuration aimed at responding to the external operating environment, strategies, and structures of the port organization. Moreover, the challenges are how to assess the impact of reforms, achieve systemic coordination within complex port systems, and implement market-oriented strategies [50][51][52][53][54].…”