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By Patrick Cull

In a massive land deal bungle, Transnet was forced to part with prime Port Elizabeth harbour land worth R1,67- billion – and a section of the land valued at R900 000 has been leased out for just R1 a year.

Transnet agreed to lease out the land in the Port Elizabeth harbour in 1998 for R300 000 and then in a bizarre twist found it had agreed to hand over a portion of the manganese ore facility.

It ended up having to part with land, including a section of the King‘s Beach parking area, valued now at R1,67-billion.

The saga began in 1998 when Tsogo Sun, bidding for a casino licence, agreed to lease a portion of the Port Elizabeth harbour.

It did not get the licence but having changed its name to Southernport successfully claimed the lease on the land for development purposes.

As arbitrator Advocate Michael Kuper explained, when part of the contract was later subject to an arbitration agreement, “it emerged that the land demarcated for leasing included a portion of the manganese ore dump, a sufficient portion to render the entire dump inoperable if exercised. To a less fatal degree, but to some degree nevertheless, the tank farm, as it stood, would also be affected.”

To get the land back on which part of the manganese facility stood – and without which, as Transnet group executive Vuyo Khala noted, the manganese plant “would have been rendered inoperable” – Transnet agreed to part with two pieces of land in exchange, one the Morton Bay site and the other a section of the King‘s Beach parking lot that bisects the Supertube.

Those now belong to Southernport whose directors are businessman Charles Erasmus, Port Elizabeth attorney Robin Jefferson, former ANC Nelson Mandela Bay region treasurer Mtiwabo Ndube, and businessmen Gosley Nondumo and Crosby Ximiya.

They now hold more than 33 hectares of prime land. The deal was agreed to by the Transnet board and Public Enterprises Minister Alec Erwin.

In addition, by February 28 next year, Transnet will have to remove the existing railway line and LPG terminal on the leased land and build a “suitable concrete solid boundary wall of at least five metres in height” between the Southernport properties and the harbour, tank farm and oil depot. Transnet estimates that will cost it R10-million.

DA MP Eddie Trent, who obtained the court documents exposing what had happened, plans to refer the matter to the Special Investigations Unit, saying that if anyone is found to have been “incompetent, corrupt or both then they must face the consequences of their actions”.

“This is just another example of how state entities have been allowed to trade recklessly with assets that historically belong to the people of South Africa. The sooner the government and the relevant minister realises they are merely custodians of these assets and that the public demand that they are held accountable for their actions, the better.”

Trent added he hoped that Transnet would now expedite the removal of the manganese facility and oil tanks to Coega.

Erwin said in reply to a written parliamentary question in August 2006 that a “consideration of R300 000” had been paid to Transnet in 2000 for making the land available and a valuation on the four portions of land now either leased or owned by Southernport puts the value at R1,67-billion.The value of the Morton Bay site transferred to Southernport is put at R230-million for the 4,6 hectares and that at King‘s Beach measuring 10,8ha at R540-million.”

The other two portions of land in the harbour on which Southernport holds a lease for 50 years with an option to renew for a further 20 years from March 1 and measuring about 18ha are valued at R900-million.

The rental for this leasehold land for the first five years from March 1, 2010 is R1 a year, rising to R100 000 for the next five years or a turnover rental of 2,5% a year. From March 1, 2025, for five years, the lessee will pay 4,5% of its annual turnover and thereafter 6%.

Source: The Herald