Denmark based Maersk A/S has said that a successful rival bidder fell short of tender requirements when International Container Terminal Services Inc was awarded a concession to run and expand sub-Saharan Africa’s biggest container port
Maersk argued in court filings to Durban High Court that International Container Terminal Services, controlled by Philippines-based billionaire Enrique Razon did not meet a stipulated solvency measure when in 2023 it won a tender that was held by South Africa’s state-owned Transnet SOC Ltd.
ICTSI was given the right to buy almost half of the main container terminal in the southeastern city of Durban and to operate it for 25 years.
The legal challenge could delay South Africa’s biggest attempt yet to bring in private expertise to turn round state-owned Transnet’s ports, which have declined over the decades and now rank as among the least efficient in the world, according to a World Bank study.
Transnet operates most of South Africa’s ports and its freight railways.
Maersk said in its filings that “one of the main requirements of the tender was that the bidder that Transnet ends up appointing as its partner in the project must have the necessary financial muscle and capacity to attract investment.” It claimed that IOCTSI failed in this regard.
Maersk unit APM Terminals, which was one of the unsuccessful bidders and reported to have been the runner-up in the process, is seeking to interdict the award on the grounds that ICTSI fell short of a solvency requirement of 0.4. It said that, based on 2021 financial statements, the total equity divided by total assets of ICTSI was 0.24.
ICTSI made the highest offer for the shares on sale. A spokesperson for the company said in an emailed response. “We are financially robust with $1bn in cash on our balance sheet”.
“Transnet believes that it followed due process in appointing the preferred partner for its Durban Container Terminal Pier 2, and will allow the legal process to take its course,” the company said.
Under the Transnet-ICTSI partnership an SPV will be created, with the execution of several project agreements including a share purchase agreement, shareholder agreement and obtaining various approvals, Maersk said. “The project to be undertaken by the preferred bidder with Transnet is massive and complicated,” Maersk asserted. It questioned ICTSI’s ability to execute it successfully.
