The KwaZulu-Natal High Court in Durban has dismissed an urgent application by APM Terminals BV to overturn the awarding of the Durban Container Terminal Pier 2 (DCT2) concession to International Container Terminal Services Inc (ICTSI). The ruling by Judge Mahendra Chetty upholds Transnet SOC Limited's decision to award the 25-year contract, valued at about US$590 million, to ICTSI, rejecting APM's bid to have it reviewed and set aside.
The dispute centred on a tender process launched by Transnet in February 2022 to secure a private partner for DCT2, which handles about 46% of South Africa's port traffic. Nine bidders, including APM and ICTSI, competed in a process involving a Request for Qualifications (RFQ) and a Request for Proposals (RFP). ICTSI, ranked eighth globally in terminal capacity, submitted a bid of US$590 million, while APM offered about US$490 million.
The disagreement arose from ICTSI's solvency calculation during the RFQ stage. The tender required a solvency ratio of at least 0.4, calculated as total equity over total assets. While most bidders used audited financial statements, ICTSI based its calculation on market capitalisation, reaching a ratio of 1.28. APM argued that ICTSI's 2022 financial statements reflected a 0.24 ratio and that this breached tender rules.
Judge Chetty disagreed, noting that "no advantage accrued to ICTSI by virtue of the score recorded in the solvency ranking. This was essentially a vetting stage to ascertain the responsiveness of the bidders." Independent verification by Sycip Gorres Velayo & Co in 2022 and GrowthStone Assurance in 2024 confirmed ICTSI's financial capacity.
Chetty cited the Supreme Court of Appeal's earlier view in the Altech Radio Holdings case, stating, "There will seldom be a public procurement process entirely without flaw. But perfection is not demanded, and not every flaw is fatal." He added that minor administrative errors do not necessarily justify judicial intervention, particularly in projects of national economic importance.
ICTSI provided letters from three major banks confirming over US$400 million in credit facilities. The RFP stage, described as a "straight price shootout," awarded ICTSI a 49% stake in the new company managing DCT2, with Transnet retaining control. APM, which scored 83% compared to ICTSI's 100%, claimed irregularities, but the court found no material breach.
The ruling confirmed that Transnet complied with constitutional and administrative requirements under the Promotion of Administrative Justice Act. Judge Chetty noted DCT2's long-standing operational inefficiencies and said the partnership was intended to improve terminal performance.
The court's decision allows ICTSI to proceed, pending the completion of share purchase and project agreements, finalising a protracted legal process over South Africa's largest container terminal concession.
Source: Freight News
