Richards Bay B2B Engagement MDS Journey 15 September 2014 1
Contents • MDS Strategy • Executing the Ports Act • Tariff Methodology and Pricing Strategy • Procurement Spend and CSI Initiatives • Transformation • TNPA Memberships 2
Transnet’s Market Demand Strategy (MDS) MDS was launched in 2012 : Create/expanding port infrastructure to create capacity ahead of demand Grow volume through capacity created and new business opportunities Increase port efficiency Self-sustainable port system Economic growth and job creation
MDS – TNPA’s Priority MDS Initiatives Initiative name Description Status 1 Implement Asset Management Lifecycle strategy Timely replacement/refurbishment of asset Implemented 2 Compliance to asset maintenance procedures Optimal maintenance of port assets Maintenance executed 3 Capital portfolio management model Timely delivery of capital projects within budget Resource constraints 4 Reduce procurement cycle times Resolve procurement delays impacting capital delivery Resource constraints 5 Implementation commenced Integrated approach to manage customer relations Implement CRM blueprint 6 Projects identified and implementation commenced Review/implement NBD programme of projects Business development initiatives to support volume growth 7 Implement s56 process projects (e.g.. NCT, Manganese) Projects identified and implementation commenced Initiate s56 projects to create new terminals 8 Establish efficiency targets and oversight teams TOPS implemented, Marine, Road and Rail to follow Monitor port performance against efficiency targets 9 Tariff Methodology agreed, Pricing strategy in consultation Finalise Tariff methodology and Pricing strategy Refine/improve pricing methodology & pricing strategy 10 Implement OHSAS 18001 at all ports Roll out occupational health and safety standards Implemented across all ports 11 SHE oversight audits (legal) – terminals/tenants Audits have been completed Compliance check of SHE legal requirements 12 Execute marine, engineering, port planning, real estate & Training programmes in place and training commenced Create a skilled workforce supply chain training programmes 13 Optimal resourcing to execute capital programme Increase capacity & capability to deliver capital Structure finalised and resourcing commenced 14 Implemented and rolled out to all management levels Talent management and succession pipelines Talent management for strategic and critical positions 15 Conversion of deemed licences Issue terminal operator licenses (deemed licences) All deemed licences issued
Capital Programme 2015/16 – 2021/21 12000 Total Investment of R 53Bn : 2015/16 - 2021/22 10000 8000 6000 4000 2000 0 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 TNPA Capital Investment Programme : 2013/14 - 2018/19 Total Capital Sustaining Capital Expansion Capital 5
Capital Programme 2015/16 – 2021/21 TNPA Capital Investment per Port : 2015/16 - 2021/22 15 325 16 000 14 706 14 000 12 000 10 000 8 382 Rm 8 000 5 272 6 000 3 743 4 000 2 297 1 579 1 532 2 000 171 - Richards Durban East Ngqura Port Mossel Cape Town Saldanha Head Bay London Elizabeth Bay Bay Office 6
Some of the key capacity creation projects Port Project Estimated Capacity 1. Durban Container 0.3m TEU’s 2019; Terminal Berth Deepening 2. Durban Salisbury 1.8m TEU’s 2024; Island Infill 3. Port of Ngqura 16mpta capacity 2019; Manganese Terminal 4. Port of Saldanha 15mpta 2019; Iron Ore Expansion 5. Port of Saldanha 5 500t capacity 2016; LPG Import Terminal 6. Port of Saldanha Oil Oil & Gas supply base, Berth 205 for rig repair, Extension at Mossgass and Gas supply base Quay for oil and gas fabrication; 7. Marine Fleet Grab Hopper Dredger delivered in August 2014 (capacity of 750 cubic meters); 9 Tug Boats : First Tug delivery Feb ’16, then one every 3 months; New TSHD will be delivered in 2016 (capacity of 5500 cubic meters); 7
The Next 10 Years : New Port Terminals (Section 56) • Passenger Terminals : Durban, Cape Town; • Liquid Bulk : Richards Bay, East London, Durban (Lot 100); • LNG : Richards Bay; • Coal : Richards Bay; • Manganese : Ngqura; • General Cargo : Ngqura; • Containers : DDOP, Salisbury Island; • Oil & Gas : Saldanha Supply Base, Rig Repair Facility; 8
Contents • MDS Strategy • Executing the Ports Act • Tariff Methodology and Pricing Strategy • Procurement Spend and CSI Initiatives • Transformation • TNPA Memberships 9
Core functions (National Ports Act Section 11) Promote the use, improvement and development of ports, and control land use within Landlord the ports, having the power to lease port land under conditions it determines Plan, improve, develop and maintain port infrastructure Master planner Optimally serve the economy Make and apply rules to control navigation within port limits and approaches, loading, Regulator and unloading and storage of cargo, development of ports and off-shore cargo handling facilities, ensure protection of the environment within port limits, enhancement of Controller safety and security within port limits Controller of ports Ensure that port services and facilities are provided, and may enter into agreements or services & facilities licence other parties to provide these Marketer & Ensure that adequate, affordable, equitable and efficient port services and facilities are provided for port users administrator Ensure non-discriminatory, fair, transparent access to port services and facilities; Change agent advancement of previously disadvantaged people; promotion of representivity and participation in terminal operations; enhanced transparency in port management Coordinator with other Advise on all matters relating to the port sector, and liaise with all stakeholders state agencies 10
Ports Act : Key Achievements Lease Manual approved; Landlord Guidelines for Agreements, Permits and Licences approved; Annual Port Development Framework Plans for all ports; Infrastructure and Fleet Maintenance Programmes in place; Master planner Project Management Protocol developed for capital projects; PMO and EPMO in place to monitor and execute capital projects; Optimally serve the economy Issued Port Rules and Regulations, Harbour Master Instructions; Controller of ports ISPS certified ports; navigation OHSAS and ISO compliant ports; Deemed licences issued; Controller of ports Port Services licenced; services & facilities Port Service and Terminal Operator oversight audits being conducted; Agreed Tariff Methodology with Ports Regulator; Marketer & Performance norms set and included in Terminal Agreements; administrator Marketing Strategy developed; Open tender processes for vacant and and new Terminals (s56); Change agent Lease transformation policy approved; Established PCC and NPCC; Established Port-City, Port-Community and Port-Government Agency platforms; Coordinator with other Established TNPA-DPE/DOT Bilateral; state agencies Memberships – PMAESA/IAPH; 11
Contents • MDS Strategy • Executing the Ports Act • Tariff Methodology and Pricing Strategy • Procurement Spend and CSI Initiatives • Transformation • TNPA Memberships 12
Regulatory Framework and Tariff Methodology (1) • The regulatory framework does not set a Tariff Methodology; • An approved Tariff Methodology assists in the application of the regulatory framework to determine the Authority’s overall revenue requirement; • In September 2012, the Authority submitted its proposed Tariff Methodology for approval by the Ports Regulator; • The proposed methodology addressed the financial sustainability of the Authority and Transnet with due cognisance of the critical years of Transnet’s MDS; • Furthermore, the Authority proposed a multi-year tariff approach from FY’s 2014/15 to 2018/19 as it executes the MDS; 13
Regulatory Framework and Tariff Methodology (2) • The multi-year approach was considered optimal as it would provide certainty to all stakeholders : o reduced regulatory effort by all affected parties; o providing certainty to funders of the Authority; and o allowing customers to plan their business accordingly during the control period. • The aforementioned methodology was consulted with stakeholders in March 2013; • The Regulator, whilst considering the Authority’s proposal issued an interim Regulatory Manual, applicable to the 2014/15 tariff year; • The tariff application for FY 2014/15 was prepared on the basis of the guidelines contained in the Interim Regulatory Manual; 14
Final Tariff Methodology (1) • On 31 July 2014, the Regulator approved a final Tariff Methodology for the governance of TNPA’s tariff setting process and matters relating to compliance; • The Tariff Methodology considers a multi-year approach, fixed for a three year period (FY 2015/16 to FY 2017/18); • The methodology further allows for an annual review and an annual adjustment of tariffs within the three year period as opposed to fixing the prices for the period.; • This means that the Tariff Application to be submitted to the Regulator will be a fixed Tariff Application for FY 2015/16 and indicative tariff adjustments for FY 2016/17 and FY 2017/18; 15
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