8 RECOMMENDATIONS AND CONCLUSION

8.1 SHORT TERM PROJECTS

8.1.1 PORT OF WALVIS BAY

8.1.1.1 THE QUESTION OF THE WALVIS BAY ASSETS

It is one of the top priorities of the Ministry of Works, Transport and Communication to solve the outstanding issue on the still open problem regarding the assets and liabilities of the former South African parastatals in Walvis Bay, especially as far as the assets and the liabilities of the South African "PortNet" is concerned. This is so more important as without any satisfactory solution it will not be possible to assign realistic values to the NamPort port assets and to give NamPort the access to unrestricted credit lines. The solution to this complexity is an absolutely important essence for the development of the Port Development Master Plan for the Port of Walvis Bay. In order to understand the intricacy of the problem some background will be provided.

The original position of the South African TransNet (PortNet) was that it has to be compensated by Namibia for the value of the fixed assets of the Walvis Bay Port which PortNet claimed amounted to N$ 84,2 million. PortNet later changed its position in respect of the conditions for transfer of fixed assets in the Port of Walvis Bay, estimated at N$ 64,4 million along with the taking over of the fixed assets by Namibia.

The position of Namibia is that the condition for the transfer of the fixed assets in the Port of Walvis Bay should be determined according to the generally accepted principles of the International Law of State Succession as confirmed in principle by the South African State President Nelson Mandela during his State Visit to Namibia in August 1994 where it was clearly stated by President Mandela, that all assets on Namibian soil, including Walvis Bay, belong to the Namibian people and cannot be claimed by the former South African coloniser.

Namibia has indicated - as a compromise in a deadlock situation - its preparedness to consider the issue of liabilities, provided only historical cost liabilities would be considered, i.e. liabilities which could be seen as directly related to actual investments in and operations of the Port of Walvis Bay. According to the Namibian view, the actual historical cost liabilities can only be determined by establishing an initial balance sheet at a cut-off date some time back in the history of the Port, and then by compiling subsequent balance sheets until 28 February 1994. For this purpose, the actual costs of fixed assets purchased per annum, the cost of assets transferred to and from the Port, depreciation costs, annual write-offs and annual revenue and expenditure for the Port should be taken into account.

According to a historical cost balance sheet of the Port of Walvis Bay as at 28 February 1994, as established by the Ministry of Works, Transport and Communication from the Annual Reports of the Auditor General of the Republic of South Africa, accumulated profit and reserves amount to N$ 60,5 million. This is represented by net assets of N$ 27,2 millions and a restated TransNet (PortNet) Head Office account of N$ 33,3 million. In terms of the above principle, the assets of the Port to be transferred to Namibia should therefore also include an amount owing by PortNet of N$ 33,3 million.

PortNet is in disagreement with the approach followed by Namibia to quantify the historical cost liabilities of the Port of Walvis Bay and is of the view that the calculation ignores material factors and information which directly effects the historical cost liabilities, without giving any evidence for this view. PortNet´s view is therefore that the historical cost liabilities of the Port of Walvis Bay reflect total liabilities of approximately N$ 64,4 million as at 28 February 1994. Due to further negotiations between NamPort and PortNet this amount was further reduced to approximately N$ 48 millions due to the selling of fixed assets by PortNet to private enterprise shortly before the re-integration of Walvis Bay into Namibia ( for instance: the strip of land at the waterfront of the fishing factories and the sailing club).

On account of this disagreement, the ownership of the fixed assets of the Port of Walvis Bay remains vested in TransNet (PortNet) until the matter can be resolved by high-level negotiations between the two governments or through international arbitration. Furthermore Namibia was for practical reasons forced to enter into a Use Agreement with TransNet on 27 February 1994. This Agreement sets out the conditions for the use by NamPort of the assets of the Port of Walvis Bay, including the care and disposal of the fixed assets.

Namibia and NamPort cannot afford to leave this situation unchallenged any longer. The assets of the Port of Walvis Bay are regarded by the Namibian Government as a Namibian asset. It is, naturally, in the interest of PortNet to delay the process of reaching an agreement on the port assets, firstly to generate income from NamPort and secondly to stop a competitor-port to reduce its port tariffs and thus eliminating a serious competitor to PortNet. Therefore, it was decided that this problem has to be solved politically, on the level of heads of state. This process was initiated during the State Visit of H.E., the State President of the Republic of South Africa, during August 1994 to Namibia.

The process has to be finalised between the Republic of Namibia and the Republic of South Africa before 31 March 1995.

8.1.1.2 ORGANISATIONAL AND INSTITUTIONAL ISSUES

NamPort should as an important short term task complete the initiated reform in the structures of the company especially in the light of the restructuring which has to come into effect after some former PortNet functions have to be taken over by NamPort. These functions are:

- Filling all vacancies in the top management of NamPort

- Structuring the management and cost accounting system with a
  clear separation between infrastructure and suprastructure

- Analysis and review of all port tariffs and turnover tariffs.

Furthermore it is important to clarify the areas of responsibility and competence between the Ministry of Fisheries and Marine Resources, NamPort and the Municipality of Walvis Bay. It is also important to create a Port Planning Division in the Department of Transport of the Ministry of Works, Transport and Communication with an engineer, an economist or finance expert with the following functions:

- Support of Department of Transport in the Ministry of Works,
  Transport and Communication and NamPort in the long term
  strategical planning of ports in Namibia

- Support in the financial planning for ports in Namibia

- Logistical support of the Board of Directors of NamPort.

8.1.1.3 PORT DEVELOPMENT MASTER PLAN

The Government of Namibia intends to improve the efficiency of the Port of Walvis Bay in a systematic and planned way in order to make Walvis Bay a major export and import harbour for the whole southern African region. Due to the fact that Walvis Bay is situated eight days sailing time nearer to the major markets of the western world this assumption is a realistic one. Assuming that this point correctly outlines the current and future situation of the Port of Walvis Bay, and realising that it is in the national interest of Namibia to strengthen its major seaport, the author of this paper suggested shortly after the historical meeting between the governments of the Republic of Namibia and the Republic of South Africa in August 1993 - which resulted in the re-integration of Walvis Bay into Namibia on 01. March 1994 - that a Strategic Development Plan on the basis of which concepts and ideas and the further development and upgrading of the Walvis Bay Port may be implemented, should be adopted by the Ministry of Works, Transport and Communication. Subsequently it was negotiated between the Ministry and the German Government (Kreditanstalt für Wiederaufbau) that such a Port Development Master Plan consisting of an Infrastructural Masterplan, a Business Plan for the Namibia Ports Authority (NamPort) and a Human Resources Plan would be financed by the German Government by a grant and be implemented as quickly as possible.

A top priority for the Ministry of Works, Transport and Communication is the speedy creation of such a Port Development Master Plan which has to entail short, medium and long term project planning for all options. This plan has to address not only technical projects but organisational and institutional projects according the following keynotes:

- Methodology and magnitude of planning
- Time framework
- Optimised and appropriate port locations
- Cost estimates.

The important basis for such a plan is the actualization and the deepening of the existing traffic prognoses, especially regarding modal split, container traffic and ships traffic for the Commercial Port and the Fishing Port respectively. Different traffic scenarios have to be analysed and investigated and their influences on different port developments determined. The development of a Free Trade and/or Export Processing Zone must be part of such investigations. In order to be flexible in the future planning regarding overall regional planning concepts and the speedy implementation of such plans an Area Utilisation Programme should be established.

Some aspects within the framework of the Port Development Master Plan have to be investigated more in depth than others with the required detailed design. Such aspects should be analysed on the level of a full scale Feasibility Study. Such key points will be the following:

- The investigation of a Common User Facility for the Fishing
   Port of Walvis Bay
- The upgrading of the Tanker Jetty
-
The upgrading and face lifting of the Synchrolift in order to
   ensure full and improved serviceability of this important
   infrastructure
- The purchase of new handling and transport equipment for the
  Commercial Port, especially for the handling of 40' containers with
   a brutto mass of 35 t. It has to be investigated whether the
   pavement of the operational areas in the port can withstand the
   axle loads of such equipment
- Establishment and reinforcement of new Operational Areas
- Upgrading of the Port Security Fence
- Improvements and upgrading in the Wastewater Disposal
  Systems
and other ecological problem areas.

The Port Development Master Plan has to be co-ordinated with the Business Development Plan for NamPort. Furthermore all plans have to be harmonised with those of the Municipality of Walvis Bay. This is especially essential for the selection of the location for the Common User Facility in the Fishing Port and the creation of a Fisherman's Wharf as a shore parallel public mall in the Fishing Port of Walvis Bay.

8.1.2 THE FISHING PORT OF LÜDERITZ

 Above Port Development Master Plan has to include the Port of Lüderitz although the development of the Port of Walvis Bay as Namibia's and her landlocked neighbours major export and import harbour has to take preference. The inter dependencies between the two ports have to be fully investigated. A further area of priority should be the speedy transfer of the Port of Lüderitz from TransNamib Limited to NamPort [38].

8.2 MEDIUM AND LONG TERM PROJECTS

8.2.1 THE PORT OF WALVIS BAY

8.2.1.1 ORGANISATIONAL AND INSTITUTIONAL ISSUES

The following projects should be realised at medium term:

- Reviewing of the existing Port Regulations, the Port Safety
  Regulations
, the Port Service Regulations and the Business
  Regulations
.

- Privatisation or Part-Privatisation of the Port Operations,
   eventually also the tug and pilot and other port services after the
   legal separation between port infrastructure and port
   suprastructure
.

- Privatisation or Part-Privatisation of the Synchrolift and the
   creation of Synchrolift Company.

For the medium term the above projects and after the realisation of the Port Development Master Plan which have been designed in detail during the short term period have to be implemented as projects and are the following:

- Public Common User Facility
- Upgradings at Tanker Jetty
- Upgrading and Maintenance of Synchrolift
- Supply of New Handling and Transport Equipment
- Creation and Paving of New Operational Areas
- Upgrading of Port Security Fence
- Further Priorities as identified in the Port Development Master
  Plan.

For the long term the deepening of the approach channel and the berths could be realised after due consideration of the economic feasibility and if warranted by the increased traffic throughput. In the case of realisation not only dredging operations are required but also considerable structural upgradings and reinforcements for the quay walls in order to safeguard the stability of the quay structures.

8.2.2 FISHING PORT OF LÜDERITZ

 As medium term measure the organisational and institutional propositions which emanated from the transfer from TransNamib Limited to NamPort have to be implemented. Furthermore a Lüderitz Fishing Port Operating Company should be created.

The technical recommendations of the Port Development Master Plan for Lüderitz Port like the deepening of the approach channel and the jetty berths and the supply of additional handling and transport equipment have to be realised.

POSTSCRIPTUM (August 2001): Due to the efforts of the author of this Memorandum the Federal Republic of Germany (KfW) financed in 1995/96 the Port Development Master Plan for the Port of Walvis Bay. In consequence of this Master Plan a new container terminal with the most modern container cranage on the African continent was realised in 1998. In 1999 sections of the port and the access channel were deepened to a depth of -12,00 m in order to increase the competition capability of the Port of Walvis Bay and make it a direct competitor to the Port of Cape Town. The dredging of the berths and the access channel was financed by NamPort themselves (negotiations with the European Investment Bank in Luxembourg and the Dutch Government failed). This resulted in the upgrading of the Port of Walvis Bay to a hub port for the whole of southern Africa including South Africa (Gauteng and Mpumalanga provinces). Only with these upgradings Walvis Bay became the terminal point of the Walvis Bay Corridor which was promoted by the author of this Memorandum since the independence of the Republic of Namibia.

Likewise, due to the efforts of the author of this Memorandum the Federal Republic of Germany (KfW) financed in 1995/96 the Port Development Master Plan for the Port of Lüderitz. In consequence of this Master Plan a new 450 m long modern quay west of the  main jetty was constructed and completed by NamPort in 1999. The new quay was financed by the European Investment Bank in Luxembourg (negotiated by the author of this Memorandum). This resulted in the upgrading of the Port of Lüderitz to an important regional port for the south of Namibia and parts of southern Africa including South Africa (the different Cape provinces and the Oranje Freestate). This will promote economically these areas by the development of new schemes like the Scorpion Mine, one of the biggest zinc mines in the world and the Kudu Gas Field development at Oranjemund. All these development schemes can make use of the upgraded Port of Lüderitz which in the next three years will be connected by an upgraded railway line to the hinterland (Aus to Lüderitz railway line).

Endnotes

[38]  The Port of Lüderitz was handed over to NamPort on April 1st, 1995.

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