NATIONAL PORTS AUTHORITY 2017 TRANSNET National Ports Authority 2017 1 Port security audits were completed

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  • NATIONAL PORTS AUTHORITY 2017

    Admired

    Agile

    Digital United

  • Market Demand Strategy (MDS) Icons key

    Financial sustainability

    Organisational readiness

    Capacity creation and maintenance

    Sound governance and ethics

    Market segment competitiveness

    Constructive stakeholder relations

    Human capital management

    Operational excellence

    Sustainable Developmental Outcomes

    Sustainable Developmental Outcomes (SDOs)

    Employment Transformation

    Skills development

    Health and safety

    Investment leveraged

    Environmental stewardship

    Industrial capability building

    Community development

    Regional integration

    The Capitals

    Financial capital Human capital

    Manufactured capital Social and relationship capital

    Intellectual capital Natural capital

    Performance Key Improvement on prior year performance Target achieved

    Decline on prior year performance

    Target partially achieved

    Equivalent performance to prior year Target not achieved

    MDS strategic thrustsMaterial clusters

    Build social trust through ethical leadership and corporate citizenship

    Unlock organisational value by attracting talent, fostering innovation and building unity

    Ensure long-term financial stability in a tough economy

    Ensure customer-centricity and build partnerships for sustainable growth

    Promote transformation and growth in the wider South African economy

    A

    A

    Navigating this report

    CONTENTS

    HIGHLIGHTS 1

    BUSINESS OVERVIEW 2

    REGULATORY ENVIRONMENT 4

    PERFORMANCE CONTEXT 5

    OPERATIONAL PERFORMANCE 6

    Core initiatives for 2017 6 Overview of key performance indicators 9 Financial performance review 11

    PERFORMANCE COMMENTARY 12

    Financial sustainability 12 Looking ahead 12 Capacity creation and maintenance 13 Looking ahead 13 Market segment competitiveness 14 Looking ahead 16 Human capital 17 Organisational readiness 17 - High-performance culture and environment 17 - Skills development 17 - Health and safety 17 Governance and ethics 18 - Environmental stewardship 18 - Social accountability 18

    NATIONAL PORTS AUTHORITY TOP 5 RISKS AND KEY MITIGATING ACTIVITIES 19

    OPPORTUNITIES 20

    ABBREVIATIONS AND ACRONYMS 21

    CORPORATE INFORMATION 22

  • 1TRANSNET National Ports Authority 2017 1

    Port security audits were completed in alignment with International Ship and Port Facility Security Code (ISPS) standards.

    Port security audits

    Two port festivals at the ports of Durban and Port Elizabeth were held during the year under review. Port festivals are platforms to promote interaction with communities and expose them to the maritime sector as a way of facilitating transformation to the sector.

    Port festivals

    NATIONAL PORTS AUTHORITY

    Net operating expenses increased by 3,9% to R4,0 billion (2016: R3,9 billion) – which is below the inflation rate of 6,1%.

    Operating expenses increased by 3,9%

    Port development framework plans have been completed for all ports.

    Port development

    Four new tugs were introduced to the port system as part of the tug-building project.

    Four new tugs

    Port maintenance dredging volumes were exceeded during the past year. (2016 actual: 4,28 million m3 vs 2016 target: 4,25 million m3)

    Port maintenance

    Port real estate vacancies were successfully maintained within the target range.

    Port real estate vacancies maintained

    The Division’s EBITDA was 12,6% lower than the previous year at R6,2 billion (2016: R7,3 billion), mainly due to inadequate volumes and revenue performance.

    EBITDA 12,6% lower

    On the construction of Joint Operations Centres (JOCs) across seven ports: the JOCs in the ports of Durban, Richards Bay, East London, Port Elizabeth, Cape Town and Saldanha are operational, with the Port of Durban JOC operating 24/7. The Port of Ngqura is in the final stages of construction. The Port of Mossel Bay is still at early stages of construction.

    Joint Operations Centres

    In the year under review, revenue dropped by 6,9% to R10,4 billion (2016: R11,1 billion). The decline is largely attributable due to a zero tariff determination by the Port Regulator and a negative claw-back adjustment of R1,0 billion (2016: positive R136 million), as well as a decrease in break-bulk and automotive volumes. The depressed local economy adversely affected volumes directly linked to the country’s GDP performance.

    Highlights

  • TNPA, in its role as regulator, is required to ensure that efficient port services are rendered to port users. As part of its oversight responsibilities, it ensures compliance by port users with conditions contained in the operators’ agreements and licences.

    South African ports owned by TNPA facilitate over 90% of South Africa’s global trade and service the shipping feeder network connecting the west and east coasts of Africa.

    Major commodities handled at the ports include coal, iron ore, containers, automotives, steel, fruit, ferrochrome, manganese ore, and petroleum and chemical products.

    The National Ports Authority (TNPA) operates as a port landlord - managing, controlling and administering the South African ports system. Core services include the maintenance and provision of port infrastructure, as well as the provision of maritime operations, such as pilotage, towage (tug assistance), dredging, and lighthouse and navigational services. The Operating Division owns and operates Transnet’s commercial ports, which are situated in Durban, Richards Bay, Cape Town, Port Elizabeth, Ngqura, Mossel Bay Saldanha, and East London.

    Business overview

    TRANSNET National Ports Authority 20172

  • 3TRANSNET National Ports Authority 2017 3 F

    ig u

    re 1

    Eight operational ports under the National Ports Authority’s control

    Beit Bridge

    SISHEN

    LIMPOPO

    MPUMALANGANORTH WEST

    FREE STATE KWAZULU- NATAL

    EASTERN CAPE

    GAUTENG

    NORTHERN CAPE

    Maputo

    Richards Bay

    Durban

    Port Elizabeth

    Mossel BayCape Town

    Saldanha

    Sishen

    Ngqura

    National Ports Authority

    East LondonWESTERN

    CAPE

  • • In response to managing regulatory and revenue risks, Transnet engaged with the Ports Regulator of South Africa and port users (through roadshows) during October 2016 to review the multi-year tariff methodology, which was then published on 31 March 2017 for the 2019 to 2021 tariff periods.

    There are three levels of regulation and control within the port environment:

    1. Regulatory oversight and compliance; 2. Economic regulation; and 3. Efficiency of port operations.

    • On 1 August 2016, the National Ports Authority applied for an average tariff adjustment of 8,02% for the 2018 financial year. On 1 December 2016, the Ports Regulator of South Africa published its tariff decision for the 2018 financial year, approving an overall average tariff increase of 5,97%.

    The National Ports Authority, as a regulated entity, is required to ensure that the execution of its strategy is in compliance with the National Ports Act, No 12 of 2005 (Ports Act). The Ports Act requires TNPA to assume the role of a regulator of port users, while also being regulated by the Ports Regulator.

    Regulatory environment

    TRANSNET National Ports Authority 20174

  • 5TRANSNET National Ports Authority 2017 5

    Strategically, TNPA assumes the role of market integrator aimed at creating value across the supply chain.

    During the 2017 financial year, operational performance measures were better than target across most measures used by the Division. This is indicative of the value- adding role that the Division aims to play. However, with the national and global economies still underperforming, the operational efficiency improvements made by the Division are not translating into commensurate financial returns as yet.

    Against the background highlighted above, TNPA’s strategic efforts during the year were focused on managing its regulatory obligations, delivering on its planned infrastructure programme, improving integration of operational performance, and enhancing customer relations as part of the total value proposition to facilitate market segment competitiveness.

    TNPA continues to implement key elements of its operating strategy, which is geared towards the reduction of ship turnaround time, vessel waiting time and cargo dwell times, as well as to the better utilisation of port assets – thereby reducing port costs.

    The National Ports Authority aims to create sustained economic value with respect to its policy mandate. It does so through its strategic role as the national provider of port infrastructure capacity and efficient and competitive port services.

    Performance context

  • Core initiatives for 2017

    Operational performance

    Implement the capital and maintenance programme.

    Improve the availability of the marine services fleet through the fleet management programme.

    Oversee compliance with Terminal Operator Performance Standards and Marine Operator Performance Standards performance targets.

    Fully oper

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