Port Elizabeth the decision taken 18 months ago to go ahead with constructing the R3bn deep-water port, trans-shipment hub and industrial development zone at Coega near Port Elizabeth has transformed what was once considered a pipe dream into a viable project, according to its managers.

They say Coega will sign up its first major tenants in the next few months.

The project will be owned and run by the state-owned Coega Development Corporation (CDC).

CE Pepi Silinga said this week that the CDC was in serious negotiations with at least 10 investors.

As negotiations were still at a sensitive stage, Silinga refused to say who these investors were. However, it is understood that the list includes major steel company Ferrostaal.

Silinga has been on a trade mission to the Pacific Rim with Trade and Industry Minister Alec Erwin and will soon be accompanying President Thabo Mbeki on a trip to the UK to discuss the project with international investors. 'We have reason to be optimistic of our chances of securing tenants before year-end,' he said.

The development of the marine and landside infrastructure at Coega will cost about R3bn in total. This excludes the 'back of port' construction, which will take place once the major tenants are in.

The port will cost R1,65bn over the next three years to build, while the container terminal, which will be developed by the CDC's preferred private sector partner, P&O Nedlloyd/TCI Infrastructure, will cost about R800m.

The final agreement with P&O Nedlloyd/TCI Infrastructure is due to be signed soon.

Development of the landside infrastructure, including acquisition of the land and development of roads and other essential services, will cost the state R550m over the next four years.

Answering criticism that government had committed R2,2bn for the development of the port and the industrial development zone infrastructure without firm commitments from prospective tenants therefore leaving itself exposed to the risk of being saddled with a massive white elephant Silinga said the original strategy of holding off on development until enough tenants had been signed up had not worked.

He said investors had a myriad of destinations open to them and would go where there was certainty, not where all that existed was the 'promise that something would be built'.

While he agreed government was not 'in the business of going into business', the state had a role in providing an enabling environment for development and this included the provision of infrastructure where the private sector would not assume the risks of doing so.