Coega plan just pie in the sky

Posted On Wednesday, 16 May 2001 03:01 Published by eProp Commercial Property News
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Management says new report is rehash of old, flawed reports.

Thabo MbekiThe management of the Coega deep-water port and industrial zone project near Port Elizabeth has dismissed a new report that urges government to abandon the scheme.

The report was compiled by a team headed by Patrick Bond of Wits University for the Mandela Metropole Sustainability Coalition a pressure group which is hostile to the project, and fearful of its environmental impact.

President Thabo Mbeki put his own stamp on the Coega project when he opened Parliament earlier this year, saying it would involve the first of a series of export-oriented industrial development zones.

However, the project has come under fire from environmentalists, and for the failure to date to attract a really big investment, in the form of a so-called anchor tenant. Billiton at one stage appeared interested in building a zinc refinery, but that plan was abandoned.

Meanwhile, Ferrostaal, the German stainless steel group, has scaled down plans for a stainless steel investment, and could move the location of such an investment away from Coega.

The report expresses concern at these 'false starts'. It argues that the Coega project will go ahead only 'at the cost of massive state subsidies and environmental degradation'.

It warns there will be 'extremely high risks' both in the development of the port and in attracting 'fickle private sector participation in the industrial development zone'.

The document accuses the planners and promoters of Coega of having been 'extremely naive' in believing that a deep-water port could make up for Coega's unfavourable location, distance from electricity sources and lack of infrastructure.

'We share the concern amongst observers that Coega is another pie in the sky project whose costs are being passed increasingly from disappearing private sector investors to the taxpayer,' the report said.

The Coega Development Corporation accuses Bond and the other economists of rehashing 'previously published papers in themselves scientifically flawed on the Coega project'.

Coega management denies that industry has turned its back on the project, and argues public investment in infrastructure 'is required for no other reason than to leverage investments by the private sector'.

'The private sector has expressed interest in developing the zone, and there is strong interest from the private sector in investing in the zone.

'That is why a number are funding very costly feasibility studies,' the corporation said.

Bond's report suggests there is underused capacity in SA including in nearby Port Elizabeth even before Coega is developed, and it questions whether the new port can be developed without extra subsidies, and whether it can ever be profitable.

Coega management says the development of the port at Coega 'has been tested scientifically and is economically justified based on projected throughput.

'This is the basis on which P&O Nedlloyd-TCI Infrastructure entered a partnership with Coega Development Corporation'.

Last modified on Thursday, 26 June 2014 13:05

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