Bidvest plans to spend an initial R100 million this year on upgrading subsidiary Bidfreight Terminals' port side facilities in Durban following a deal with the National Ports Authority (NPA) that secures its leases for up to 20 years.

Brian Joffe, Bidvest's chief executive, confirmed the investment yesterday.

The deal follows three years of negotiations between the two parties.
The NPA has been seeking to consolidate lease sites and activities at all South African ports and ensure the value of the leases for prime port land are market related.

Many leases with the private sector at South African ports, and specifically Maydon Wharf at the Durban harbour, were signed well over 30 years ago with no adjustment for inflation.

The deal with Bidvest consolidates 42 leases into nine, with a value of R33 million a year. The deal excludes the lease for Bluff Mechanical Appliances, where coal is handled, which is still being negotiated.

Jacob Molefe, the NPA's executive manager for property, said rentals had been adjusted to become market related, with a fixed escalation and subject to review on a five-yearly basis.
The deal also includes terminal performance measures such as a minimum annual tonnage.
Bidvest has the scope to approach the NPA for it to handle additional or new commodities.

Anthony Dawe, Bidfreight Terminal's managing director, said yesterday "with the leases up in the air, we have not been able to invest".
Bidfreight's investment plans now include R30 million on a new warehouse, R45 million on a new ship loader at the grains and bulk terminal, and R20 million on new tanks at Island View Storage.

This is over and above the R40 million Bidfreight has already spent on six new silos at the grain terminal at Maydon Wharf.

"The plan is over the next five years to spend R500 million," Dawe said.

Bidfreight, which is the largest single private sector tenant at the Durban port, handles about 10 million tons of cargo a year, the majority of which is moved through Durban.

In the year to June 2004, Bidfreight reported an 11.5 percent drop in revenue to R12.1 billion but a rise of 5.5 percent in trading income to R417.3 million. Its parent company Bidvest reported revenue of R51.3 billion and trading income of R2.6 billion.

The NPA's side of the bargain is to invest in port infrastructure.

Khomotso Phihlela, the NPA's acting chief executive, said "we will spend R13.8 billion on port infrastructure over the next five years, R6.5 billion of which will be in the port of Durban".
This will include the upgrading of berths at Maydon Wharf.

Phihlela said the remodelling of Maydon Wharf will result in, among other things, an increase in the throughput of cargo, improved berthing arrangements, the rationalisation of roads and rail, and improved safety.

The NPA has already renegotiated leases with Unilever, Commercial Cold Storage and Agriport.