Trade zones

Posted On Monday, 17 March 2003 02:00 Published by eProp Commercial Property News
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The Dube trade port - a R2,5bn public-private partnership (PPP) initiative to develop a first-class trade hub around Durban harbour - is taking shape after years on the drawing board.

Property-Housing-ResidentialNamed after the late ANC stalwart, John Dube, the trade port and industrial development zone promises to create 15 000 direct jobs.

Alongside it will be the new King Shaka airport at La Mercy, to replace Durban International, which is to be decommissioned.

A master plan is on the table now and Price water house Coopers has been appointed financial adviser to the PPPs. Tenders are expected to be out by midyear.

The test, though, is whether the province's high expectations of private-sector involvement will be met. Rohan Persadh of the province's economic development & tourism department says that for every R1 the province forks out, it expects R5 from the private sector.

The cost of developing King Shaka's runway and taxiways will be around R500m. The cost of the terminal buildings and a cyber port to serve as a technology hub would bring the total cost to around R2bn in 2006 prices.

The province wants to pass on substantial risk to the private sector. Investec head of project finance Jose dé Nobrega says projects like Coega and Dube come with higher risks than, say, toll road PPPs, where returns are guaranteed as traffic volumes are high. In Dube's case, there is no guarantee the new airport will bring in the numbers.

The province says the project would make sense to those who see the merits of "an intermodal logistics platform".

Since Durban International will no longer exist, King Shaka will take over its customers - perhaps a sore point for the Airports Co of SA (Acsa), which stands to lose revenue. The airport contributed 8% to Acsa's turnover in the March 2002 financial year.

Designed to aid rail, road and air transport, the Dube trade port will link King Shaka with the Nyaninga rail network that goes from Durban to Richards Bay harbour. Getting to the Durban container terminal 20 km away would also be easier via the N2 and the rail network.

King Shaka's design gives priority to large freighter capacity. With a 3,2 km runway it will be able to accommodate big aircraft like the Airbus A380, which have been ordered by SA Airways. Durban International's shorter runway limits it to smaller aircraft.

Persadh says the province is negotiating with customs & excise to allow bonded movements so that goods can move from one end of the chain to the other on a single customs charge rather than a separate tariff for every entry.

The province is running into some difficulties in acquiring land around La Mercy from Acsa, which acquired the 2 040 ha property at no cost from the public works department five years ago.

Negotiations between the two have failed and the province is now dealing directly with the transport department, Acsa's major shareholder.

It hopes to get 80% of the land free but recognises it may have to pay out Acsa's 20% shareholder, Aeroporti di Roma, for its portion . The land is valued at about R30m.

Another contentious issue is whether the province will give Acsa a contract to manage King Shaka. Understandably, Acsa is also sensitive about the decommissioning of Durban International, which it renovated last year.

It may seek a domestic licence to retain the airport. If it fails, the National Ports Authority may consider taking over the land.

Last modified on Thursday, 26 June 2014 15:04

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