TNPA East London

Port Overview Presentation

Date: 13 October 2015

The content of this presentation is for general information purposes only and shouldnot be construed as creating an expectation of any nature whatsoever regarding theway forward relative to the issues under consideration.

Rights are fully reserved not to proceed in respect of the issues under considerationand to alter views expressed.

The basis upon which to proceed relative to the subject matter of this presentation,or not to proceed as the case may be, will be developed outside the ambit of thispresentation and for this specific purpose the content of this presentation should notbe relied upon.

Please be guided accordingly.

DISCLAIMER

TABLE OF CONTENTS

1. Introduction to Transnet Structure

2. TNPA Business Overview Summary

3. Core Functions of Ports

4. Port of East London Business Overview

5. Port Challenges and Interventions

6. Port Volumes

7. Capacity Management

8. Port Development and CAPEX

9. Operations Phakisa Initiatives

10. New Business Development – Business Opportunities

11. Stakeholder Engagement Platforms

12. Our People – Our Community

INTRODUCTION: TRANSNET STRUCTURE

The National Ports Authority is a landlord Port Authority thatprovides port infrastructure and maritime-related services at theSouth African ports. Key business parameters :

9 operational ports – coastline approx 2 800km106 berths (20 container,26 dry bulk, 38 break-bulk,16 liquid

bulk, 6 automotive57 maritime craft (30 tugs, 9 pilot boats, 7 workboats,3 pilot helicopters, 5 dredgers, 4 survey boats)4 178 permanent employees countrywide

Eight Operational Ports

Core Business:Infrastructure – Capacity planning, Development, MaintenanceMarine Services – Pilotage, Tug and Berthing ServicesDredging – Maintenance dredging and Hydro graphic surveysLighthouse Services – Provision of Aids to Navigation

Ports – key commodities:Durban – Containers, Autos and Liquid bulkRichards Bay – CoalSaldanha – Iron OrePort Elizabeth – Containers and AutosCape Town – Containers and FruitEast London – AutosNgqura – ContainersMossel Bay – Liquid bulk

Core Business & Key Commodities

Lighthouses Infrastructure Marine Services Dredging

Four Core Business Activities

Cape TownPort Elizabeth

Durban

SaldanhaBay

East London

Richards Bay

Ngqura

Mossel Bay

TNPA BUSINESS OVERVIEW SUMMARY

Port Nolloth

MASTER PLANNER

LANDLORD

MARKETER &

ADMINISTRATOR

COORDINATOR WITH OTHER

STATE AGENCIES

CHANGE AGENT

Promote the use, improvement and development of ports, and control land use within the ports, having the power to lease port land under conditions it determines.

Plan, improve, develop and maintain port infrastructure.

Make and apply rules to control navigation within port limits and approaches, ensure protection of the environment and ensure safety and security within port limits.

Ensure that adequate, affordable, equitable and efficient port services and facilities are provided for port users.

Ensure non-discriminatory, fair, transparent access to port services and facilities; advancement of previously disadvantaged people; promotion of representivity and participation in terminal operations; enhanced transparency in port management.

Advise on all matters relating to the port sector, and liaise with all stakeholders.

CONTROLLER OF PORTS

NAVIGATION

CONTROLLER OF PORTS

SERVICES & FACILITIESEnsure that port services and facilities are provided, and may enter into agreements or licence other parties to provide these.

CORE FUNCTIONS OF PORTS

(National Ports Act, Act 12 of 2005 - Section 11)

PORT OF EAST LONDON BUSINESS OVERVIEW

The National Ports Authority is a landlord Port Authority thatprovides port infrastructure and maritime-related services at thePort of East London. Key business parameters :

1.3 million square metres land area4 Terminals7 Terminal Operators11 berthsShip Repair Facilities3 maritime craft (2 tugs, 1 workboats)179 employees

Port Layout and Berth Data

Key Port Commodities:

Inbound• Automotive Components (Containers)• Vehicles (Ride on Ride off) (RoRo)• Fuel (Liquid Bulk)• Grains – Wheat (Dry Bulk)• Cement (Breakbulk)

Outbound• Vehicles (RoRo and Containers)• Automotive Components (Containers)• Processed Foodstuff (Containers)• Livestock (Breakbulk)

Key Commodities

Grain Terminal(Dry Bulk)

Multi PurposeTerminal

(Container & Breakbulk)

Car Terminal(RoRo)

Tanker Terminal(Liquid Bulk)

Terminals

Challenges Interventions

Infrastructure incompatible to commercial enterprise opportunitiesDeepening and widening of entrance channel included in 10 year Capital Expenditure (CAPEX) plan

Dominant terminal operator – Transnet Port Terminals (TPT)Strategic pockets of land occupied by one terminal operator–misalignment between capacity and utilisation (loss of opportunity and revenue for port)

All future terminals to follow Section 56 process (e.g. Heavy Furnace Oils (HFO) Tank) – New entrants

Reliance on one customer (Mercedes Benz SA) - vulnerable and susceptible to market conditions and global trends in the automotive sector. Cyclical revenue based vehicle production cycles.

Attracting other Original Equipment Manufacturers (OEM’s) and diversification of cargo streams.

Tariffs and the effect of tariff reform on port profitability. Optimisation of port land and infrastructure

Age Profile of Employees – Critical/core competenciesImplementation of internships – Young professionals / Succession Plans.

Oversight – Enforcement regime required to mitigate risk to TNPA of inconsistent applications

Implementation of operations strategy - Port System Performance Management (Terminal Operator Performance Standards - TOPS, Marine Operator Performance Standards - MOPS, etc)- Operations Centres- Development of consolidated terminal profiles

KEY CHALLENGES AND INTERVENTIONS

PORT VOLUME PERFORMANCE

Containers31.6%

Dry Bulk 5.1%

Liquid Bulk33.0%

BreakBulk4.5%

Automotive25.8%

Commodity ActualConversion

FactorConverted Tonnage

Containers 51 942 16 831 072

Dry Bulk 133 379 1 133 379

Liquid Bulk 869 232 1 869 232

BreakBulk 118 795 1 118 795

Automotive 75 378 9 678 402

10 YEAR CAPITAL INVESTMENT & OPPORTUNITIES

Existing Layout

R 2.8 Bn

Medium to Long Term Layout

Strategic Projects• Deepening and widening of Port Entrance Channel• Replacement of Buffalo Bridge • Foreshore Protection – Supplier Development (SD) 40.9%• Sheetpile Wharf Rehabilitation • Security Protection Upgrade • Refurbishment of graving dock

Expanded breakwater& turning basin

Small CraftHarbour

Signal Hill Development

ExpandedCar Terminal

Tourism & Leisure DevelopmentPhase 1 & 2

Replacementof Buffalo

Bridge

PotentialNew Terminal

Vacant Land Vacant

LandNew TerminalOperator HFO S56

Operations Phakisa

Shipbuilding

234.9 160.4 190.2334.7 247.2

692.5 727.3

202.53.0 3.0

0.0

500.0

1000.0

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25

Time Frames

DEEPENING AND WIDENING OF ENTRANCE CHANNEL

Main Purpose

DEFINE PROJECTOPTIONS

SELECTMOST VIABLEOPTION

DEVELOPPROJECT

DEFINITION

IMPLEMENTPROJECT

CLOSEPROJECT

We arehere

Year Completion Jun 2015 Jun 2015 Jun 2017 Sept 2021 Nov 2021

Phase Concept

(FEL-1)

Pre-feasibility

(FEL-2)

Feasibility

(FEL-3)

Finalise

(Close-out)

Execution

(FEL-4)

Activity § Identify

business need.

§ Generate

Various

options to

address the

need.

§ Execute Low

level designs

on the various

options

§ Preliminary

designs and

high level

Geotechnical

studies on

various options

§ Selection of an

ideal option

based on the

studies.

§ Cost of all

options.

§ Detail design

on the chosen

option.

§ Environmental

Impact

Assessment

§ Detailed

Geotechnical

studies

§ Detailed Cost

Estimate

§ Tender

Documentation

§ Procurement

Process

§ Construction

§ Hand over

§ Performance

confirmation

§ Archive

documentation

§ Acceptance

§ Commercial &

financial

closure

§ Post project

review

§ Close-out

report

Ga

te 1

Re

vie

w a

nd

Ap

pro

va

l

Ga

te 2

Re

vie

w a

nd

Ap

pro

va

l

Ga

te 3

Re

vie

w a

nd

Ap

pro

va

l

Ga

te 4

Re

vie

w a

nd

Ac

ce

pta

nc

e

Pro

jec

t c

los

ed

OVERVIEW OF SHIP REPAIR – OPERATIONS PHAKISA

Key Deliverables• Refurbishment of Graving Dock over next 3 years:-

• Refurbishment of dry-dock cranes• Replacement of crane rails• Refurbishment of dry-dock gate• Replacement of switchgear• Refurbishment of pumps

• Refurbishment of Slipway area

Project• In support of Blue Economy, NDP:

• Industrialisation• Job Creation• Skills development

• Create a new funding and revenue model, helping to reducecost for infrastructure.

• Refurbish and optimise operations of existing infrastructure.

§ Operator: Transnet National Ports Authority

§ Repairers: (Private Repairers)§ East London Shipyard§ Mac Engineering§ Land Marine Projects§ Intsimbi Group§ GL Enterprise Trust§ Amnion Projects

§ Dock Length: 200m & Max beam: 24.8m

§ Equipment:- 4 x Cranes (2 x 15 ton, 1 x 5 ton and 1 x 4 ton)

Shop 17Area: `2 690m2

Height: 12.5m

Sheet Pile WharfLength: 106m

Repair QuayLength: 106mDepth:- 9.5m

DRYDOCKSLIPWAYLENGTH: 200m

WIDTH: 15.24m

Slip Way Capacity 800 tons

MHAArea: 1 819m2

TOTAL AREA: 2.4h

13

OPERATION PHAKISA

• A Strategy Workshop was held on 29 & 30 July 2015.• The purpose of the workshop was to assess opportunities of how to

position the ship repair business to support operations Phakisa in EL,• The following were the key focus areas:

• The proposal to repair all TNPA fleet in EL,• Opportunities for industrialisation,• Skills development (college concept).

• A strategy framework document was developed with a number of topics tobe investigated.

• A project schedule will be developed assigning tasks to various role players.

Refurbishment of Graving Dock - Upgrade Fire Protestation Boost Pump, Air Compressor, DC Capstans, Main Shut-off Valves.• The project is currently in FEL 3• The gate review was held on the 28 and a few changes were requested.• All changes will be submitted to the gate review team on 14 August 2015.• The next gate review is re-scheduled for 25 August 2015.• Targeted investment forum is in September 2015• Targeted Capex is in October2015

Switchgear ReplacementOverall Progress to date is 40%.Stage 3 of 6 : Design Development. Final design and Technical Specification have been completed RME going through the procurement process to appoint a supplier.

Boat Building Initiative• Engagement with various parties – private and EC Provincial Government• Appointment of Transnet transactional advisors

PORT OF EAST LONDON SHIP REPAIR STRATEGY

KEY 2015/16 CAPITAL PROJECTS

Progress• The port visited the school of engineering in East London

(TE)• Purpose of visit was to understand the process required to

establish an accredited training centre• Discussions with Transnet Engineering Curriculum

Development Manager,• List of critical skills identified• The port propose to focus on a single skill set as a start• Proposed site for the college identified• The Registration process has been outlined.

Way Forward• Establishment of a working group consisting of Transnet

Engineering & School of Ports• Identification of existing accreditation documents• Creation and filling of structure• Approval of funding to renovate existing building.

DEVELOPMENT OF TECHNICAL COLLEGE

PARTNERSHIPS

PROPOSED DEVELOPMENT - LATIMER’S LANDING Phase 1

INVESTMENTS:

• R2.1m Basic maintenance of buildings – Painting, water reticulation, etc. (2013/14)

• R1.0m Additional maintenance (2014/15)

• Technical studies and architectural design

• Jetty Upgrade – over 2 years – Commencing 2015/16

• Security Upgrade – Access control, CCTV and additional lighting

Craft Market Option 1

Craft Market Option 2 Proposed Tourism Office

Plus 4 x SMME’sExisting

RestaurantJazz Lounge

Vacant5 Year Lease

Port of EntryPolice boat

Shed & Workshop

DPW – RelocateTourism & Leisure Proposed Public

Parking Area

Jetty

New AccessControl

Blue Line pipeline

Existing HFO Tank

Year Tank Commissioned 1977

Total Capacity 8,149,814 litres

Working Capacity 7,639,945 litres

Unpumpable Capacity 509,869 litres

Existing terminal footprint 8,000 m2

Proposed terminal footprint 21,000m2

Yellow depicts rail line Tanker berth

Red = existing terminal boundary Pink = proposed terminal boundary

Terminal Information

NEW MARKET ENTRANTS - SECTION 56

1. PROVISION OF PORT SERVICES AND PORT FACILITIES AND USE OF LAND, Section 56, National Ports Act, Act 12 of 2005.

2. Guidelines for Agreements, Licences and Permits as approved by Transnet Board

Legal / Governance Framework

NEW ENTRANTS – SECTION 56

• Transnet EC Provincial Government Strategic Forum

• Joint Planning Sessions – IDP / LTDP (Long Term Development Plan)/ ELIDZ

• Port Consultative Committee

• Customer/Stakeholder/B2B (Business to Business) – Sharing of

developments & planning

• Project Specific Engagements

• Investor / Industry Specific Engagements

• Ad hoc and Issue Specific Engagements

• Business Chambers

• BKCOB

• NAFCOC

BUFFALO CITYMETROPOLITANMUNICIPALITY

PRIMARY ENGAGEMENTS PLATFORMS:

YEAR % BBBEE

2014/15 109%

2013/14 90%

2012/13 85%

2011/12 66%

2010/11 41%

Suppliers / Service Providers:• Not interested in operational requests (day to day purchases)• Only interested in long term tenders/high value acquisitions• Failing to meeting delivery requirements due to logistical constraints• Failing to delivery due to financial constraints resulting in cancellations of orders

and causing delays in operations• Not adhering to RFQ (Request for Quotations) requirement resulting in

disqualification• Over commitment resulting in non delivery and poor quality goods and services

Various engagement sessions e.g: Local Business Chambers

Procurement of goods and services are strictly procured in line with Transnet Detailed Procurement Policy as approved by Transnet Board

BBBEE SPEND AND SUPPLIER DEVELOPMENT

• Address skills shortage via Apprenticeship & Section 28 (Recognition of Prior Learning) programmes

• Engineering in Training & Technician in Training Programme

• Appointment of Young Professionals in various professions

• Strategic Partnering with Office of the Premier

• Succession planning will address the Aging Workforce Profile, especially technical skills.

• Talent Management Pool - skilled and experienced workers in Mentorship Programme

• Capacity Building Initiatives will serve as the Vehicle to address employment equity targets (1:3 appointments/promotions must be female)

Growing & Developing our Workforce

OUR PEOPLE

OUR PEOPLE – OUR COMMUNITY

CSI Objectives

• Awareness of maritime careers and port as a neighbour

• TNPA as a good corporate citizen

• Role of port in the economy of Eastern Cape & SA

• Awareness of port facilities & activities

• Opportunity for partnerships with key stakeholders

CSI Port Spend R3 620 000

Projects

Education (Maths and Science)

• ITEC (Maths & Science Intervention) – 10 Bursaries 2014 and ongoing

• Take a Girl Child to Work

• TNPA Maritime Career EXPO - 3 000+ Students over 5 days

• Youth Chamber of Shipping in Africa- Careers Exhibition Mdantsane Indoor Centre- 1 000+ Students

Employee Volunteerism

Sport Development:

• Lwazi Jquira

• Legends Sports Race Partner

VALUE TO TRANSNET AND TNPA

Business (value to prospective clients)

• Community builder

• Stakeholder / Customer collaboration

• ROI -Strong Brand Positioning

• Social (value to community)

• Exposure to a working Harbour

• Fund-raising opportunity for charities

• Safe, top class entertainment –family orientated

FUNDING MODEL

Primary Funders to be targeted:

• TNPA

• BCMM

• ELIDZ

Development of sustainable funding model

• EC Parks & Tourism

• MBSA

SECOND CREEK CRECHE – WOMEN’S MONTH INITIATIVE

ITEC MATHS & SCIENCE CSI INTERVENTION

JOHN BISSEKER HIGH SCHOOL – MANDELA DAY

PORT FESTIVAL

PORT FESTIVAL