Transnet board going nowhere, Gordhan tells Durban business chamber

eThekwini businesses have urged the minister to fire executive members of the board, saying they are responsible for service delivery failures at the port

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Public Enterprises Minister Pravin Gordhan has thrown his weight behind Transnet’s board after the Durban Chamber of Commerce and Industry called for the axing of chief executive Portia Derby and her team in a private letter addressed to the minister last week.

In the letter, signed by chamber chief executive Palesa Phili, the city’s business organisation pleaded with Gordhan to intervene in Transnet’s affairs and for “the removal” of Derby and “her executive team”, including Transnet Freight Rail (TFR) chief executive Sizakele Mzimela and Transnet National Ports Authority (TNPA) chief executive Pepi Silinga. 

The Mail & Guardian understands that the Durban chamber is just one of six organisations, including the Association of South African Chambers, in the country that have written to Gordhan calling for his intervention in the state-owned entity. The Durban chamber represents 3 000 businesses in eThekwini metro. 

The correspondence comes after Gordhan’s directive three weeks ago to the Transnet board to make recommendations to address the state-owned entity’s operational shortcomings. 

Transnet reported a loss of R5.7 billion in 2022-23 and a drop of 23.6 million tonnes in rail freight, down to 149.5 million tonnes.

Phili declined to comment on the letter, saying it was a private communication to Gordhan that had been leaked to the media.

In its letter, the chamber said: “We would like to bring to your attention our concern regarding the current chief executive officer of Transnet Ms Portia Derby and her executive team. The business community of eThekwini has reached a point where we can no longer tolerate her behaviour.”

The chamber alleged that Derby and her team were “sabotaging” businesses because of the port’s poor service delivery.

The chamber said it had written to Derby after she made a “damaging statement” in the media about possible job losses in the road logistics sector when freight rail services improve, and about not having manufacturing in South Africa. 

Derby had been quoted saying: “We have created the demand — our failure on one hand and also the demand of the mining industry has created the trucking industry. For the vast majority of the truckers, they are moms and pops, who when they left work took their pensions and bought a truck because there was an opportunity.”

The chamber said her remarks “further harm the current operations, and encourage violent unlawful behaviour, potential job loss and corporate sabotage”.

It said it had also raised other “critical issues that require immediate attention” in the letter to Derby and requested a meeting with her.

“The business community needs a clear presentation on the decision regarding [Durban Container Terminal] Pier 2, with the new investors, what is the timeline, what improvements will come to our ports. We need a clear understanding of comments made regarding the rail and truck issues. We need the CEO to clearly explain her comments regarding not having manufacturing take place in our country,” the chamber said.

Transnet announced on 17 July that Philippines-based International Container Terminal Services had been selected as the preferred bidder for the operations of Pier 2. 

This concludes the process of selecting an equity partner for the terminal but few details have been released to the public. Transnet has said it will retain ownership of its assets such as equipment and the new operator will provide technical skills and skills transfer, and that there would be no retrenchments.

The chamber said it also needed clarity regarding whether union concerns had been addressed and whether current Transnet service delivery issues were not related to there being no agreement with workers.

“Over and above these issues, we need [these] urgent matters addressed, which are internal however are having a negative effect on the business community externally. 

“TNPA is also another major concern, under the leadership of Mr Pepi Silinga. As organised business, we believe there needs to be an in-depth investigation into TNPA’s recruitment and procurement processes. We firmly believe that Transnet is a critical state infrastructure that cannot be allowed to fail or be left to operate in disarray and fall into mismanagement,” the chamber said.

It added that it had not seen a firm commitment with timelines from Transnet, TFR and Mzimela, guaranteeing the operation and efficiency of the rail network.

“Whilst there are external factors contributing to the rail network not functioning, we have not seen interventions that identify and review internal inefficiencies … there is a lack of stakeholder engagement by TFR. This is resulting in business uncertainty.

“The South African economy is highly reliant on the logistics sector; hence, an efficient state-owned entity and port will positively impact the entire value chain, from trucking companies to the receiving businesses. As the Durban chamber, we firmly believe that Transnet is a critical state infrastructure that cannot be allowed to fail or left to operate in disarray and fall into mismanagement.” 

The chamber said local businesses did not believe Derby’s executive team “has the best interest for the business community when it comes to issues of the port, and how we need to resolve these”. 

“We require your intervention, minister, in the removal of Ms Portia Derby and her executive team from their current roles and responsibilities,” the chamber added, alleging that “they have proven time and time again that they are incompetent”.

“Transnet requires an executive team that is suitable, accountable, transparent and a team that will give this matter the urgency that it needs. Businesses are collapsing and losing revenue daily due to the port challenges, we cannot allow this to continue any longer,” the chamber said.

Gordhan said in a statement on Monday that he had noted correspondence from the Association of South African Chambers in which its members called for “decisive action to resolve the issues impacting the economy because of Transnet’s underperformance”.

“The recently announced annual financial results of Transnet have made it very clear that the entity urgently requires serious interventions that will address the root causes of the deficiencies that are having a negative impact on our economy and are hurting our export competitiveness,” he said.

“The board is seized with the injunction that I have given it, and I am sure that the issues that have been raised by the chambers will be addressed in its recommendations or in the feedback that the board will present to the shareholder. The shortcomings of Transnet are of national concern.”

The issues that Gordhan directed the board to report back on included its operational transformation, implementation of stringent accountability oversight, management review, information and operational data transparency, excessive cost structure and discussions with employees.

“I am confident that the board understands the scale of the challenges that are confronting Transnet, and I can assure the South African public that the board has my full support in its effort to come up with the requisite remedial actions. We will be engaging the chambers,” Gordhan said.

Transnet said in a statement that it was aware of the letter “expressing concern about operations at the city’s port, and calling for the removal of the Transnet leadership as a solution”.

“Transnet’s Group CE [chief executive] Portia Derby met the mayor of eThekwini, Mxolisi Kaunda and the CEO of the chamber, Palesa Phili, on the sidelines of another engagement in Durban this morning [Friday] and the parties have agreed to collaborate on finding solutions to the pressing challenges,” the state-owned entity said.

“A meeting will be held as a matter of urgency to discuss the critical issues which cause frustration to the members of the chamber. After this meeting a joint statement will be issued by the parties, detailing the interventions to be implemented by Transnet.”

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