The Durban High Court has dismissed an application by Maersk's APM Terminals to halt Transnet's US$603 million (R11 billion) agreement with Philippines-based International Container Terminal Services (ICTSI) for the partial privatisation of Durban Container Terminal 2 (DCT2).
APM Terminals, which was the runner-up in the tender process, had previously secured an interdict suspending implementation of the deal. It then sought a review to set aside the 25-year concession awarded to ICTSI. Judge Mahendra Chetty delivered his judgment on Friday, dismissing the review and ordering each party to bear its own costs.
Chetty said the central question was whether a "slip" in a contract of national importance justified setting aside the outcome at the request of an aggrieved bidder. Judicial review, he noted, is a discretionary remedy, and not every procedural flaw leads to invalidation.
APM argued that ICTSI had failed to meet the solvency threshold required during the responsiveness phase of the tender. Chetty said it was undisputed that ICTSI had the financial capacity to secure investments for port development. He described the contract as one intended to attract a private partner to develop and operate DCT2 over 25 years.
"There is no dispute that DCT2 has been plagued for decades by limited operating capacity, resulting in freight backlogs and congestion. This has had a knock-on effect on the local economy, increasing the costs of goods moving in and out of the country," Chetty said.
During the final bidding phase, ICTSI's offer exceeded APM's by nearly US$110 million (R2 billion), placing APM second. The dispute centred on whether ICTSI had been assessed using the same solvency ratio formula as other bidders. Transnet appointed Growthstone Assurance Incorporated to test ICTSI's financial soundness in December 2023. The firm concluded that ICTSI was in a "good position" to raise additional capital for investment in DCT2.
Transnet later stated that ICTSI's failure to meet the specified solvency ratio "was not material." The company argued that the challenge was based on a "narrow technical ground" aimed at disqualifying ICTSI so APM could claim the winning position.
Chetty found that the tender documents gave Transnet discretion to judge bidder compliance and to waive requirements where appropriate. "It was apparent that those entrusted with drawing up the tender document clearly contemplated that the purpose was to maximise the financial potential of the public/private sector partnership," he said.
The judge concluded that disqualifying ICTSI would have excluded a meritorious bidder and allowed a lower offer to prevail, undermining competitiveness. He found no evidence of corruption or unlawful conduct and dismissed APM's application.
Source: Sowetan
