Walvis Bay – Speculation around the new container terminal was finally put to rest when the Namibia Ports Authority announced it would lease it for the next 25 years.

Namport CEO Andrew Kanime said in his brief to port users and journalists in Walvis Bay on Thursday that they had appointed international consultancy firm Maritime Business and Transport Solutions (MTBS) to help them with the process. At least five reputable operators have expressed interest in operating the new container terminal which was commissioned in 2019. Kanime said concessioning the N$4.2 billion investment does not mean that it will be sold, but that they will enter into a specialized lease agreement, where the operator manages the terminal and manages the containers instead of an upfront payment to Namport. The agreement should be finalized before the end of the year. “The successful operator should be able to make volume-related payments over the term of the concession, introduce additional capital for investments and drive operational efficiency. The operator will only be allowed to manage container and limited project cargo, not non-containerized cargo, for 25 years.

This is in line with international benchmarks that will allow them to recoup their investment, as the contract will involve the expansion of the quay and terminal yard to increase throughput,” he added.

Kanime explained that the decision to lease became a reality when the dynamics of the shipping industry changed significantly due to depressed macroeconomic conditions that negatively impacted industries in all sectors, including terminal at newly built containers.

As a result, imports and exports handled through Namibian and other ports in the region and shipping lines have opted to deploy larger vessels as part of their own cost rationalization effort.

“These unforeseen and unfortunate developments have resulted in a significant decrease in volume throughput through the new container terminal. Given the need to make a return on this very strategic investment, we have been compelled to explore ways and means to boost the use of the terminal, and among the results of our reflections was the decision to consider the concession of the new terminal to an independent operator,” he said.

The new container terminal employs less than 300 people, who Kanime said have been briefed on the development, and will be employed by the new operator, once appointed.

“The agreement will ensure that jobs at the new container terminal are not affected, although the terminal will operate independently,” he continued.

Challenges posed by Covid-19 caused Namport’s revenue to decline by 2% to N$1.113 billion (2019/20: N$1.138), exceeding the FY2020 target of N$1.032 billion/ 21. Despite these hurdles, Namport still managed to generate an operating profit of N$96 million (2019/20: N$132 million), while Namport Group revenue declined by 12% to N$1.485 billion. N$1.688 billion (2019/20: N$1.688 billion), with an operating profit of N$146 million (2019/20: N$203 million).

“The year ending March 31, 2021 was arguably one of the toughest in the group’s recent operating history. The start of the year coincided with the arrival of the Covid-19 pandemic our shores, following the initial outbreak in China in late 2019. The fiscal year was therefore marked by continued lockdowns, which were imposed to stem the spread of the virus,” Kanime said in its latest annual report.

The drop in revenue was largely attributable to lower volumes everywhere and dockings at ship repair facilities, another direct reflection of the impact of Covid-19 on business.

Operational performance of vessel calls at the ports of Walvis Bay and Lüderitz in the year ending March 31, 2021 decreased by 444 vessels or 25%, year-over-year.

Main port operators

Concessioning ports around the world is common practice, with China Ocean Shipping Company (Cosco), Singapore’s PSA International, Dubai Ports World, China Merchant Port Holdings, AP Moller Terminal and China’s Hutchinson Port holdings considered major operators .

According to online reports, PSA International owns and operates more than 25 ports in Asia, the Middle East, Europe and Panama. Chinese Port Operations Hutchinson operates 300 berths in critical ports around the world, while its holding company operates 48 ports on major shipping routes in Asia, Europe and Africa. Dubai Port World is a relatively new player, but its terminals handle nearly 10% of all global container trade, and it is a major player in Asia and Europe. It now also has interests in Africa and operates 40 terminals worldwide.