Publication: Noseweek, Issue 31 Issued: Date: 2001-02-01 Reporter: Editor:

More Dirt on the Track
(Arms and the sham railroading the Coega harbour deal)




Date February 2001, Issue 31

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Why is the government so anxious to make the “off-sets” (the foreign investments that are supposedly going to pay for our 60-billion-and-growing arms procurement programme) appear genuine – when they so clearly are not? 

One possible reason is that armaments purchases, while producing nothing for the country, will undoubtedly produce great wealth in on- and offshore commissions for various people well connected in high places. 

Most manufacturers in Gauteng export via Durban harbour.  The route to Durban is shorter and non-stop on a double track – making it cheaper, quicker and more secure.  More ships call at Durban, making shipping arrangements more flexible and competitive.  

Port Elizabeth attracts little or no shipping from Gauteng for very obvious reasons: it is further away and there are many stops along the single-track rail route, making the journey take much longer – and making container cargos extremely vulnerable to theft.  Fewer ships call at PE, making for inflexible schedules and higher costs. 

So the liars and spin doctors in government have set about trying to find feel-good factors in which to dress up the deal.  Ah, says one, we can say the deal will generate jobs for the masses of unemployed in the Eastern Cape.  That is sure to make the voters feel good. 

Yes, say those clever European arms dealers: we’ll build a – privatised – new deep-water harbour at Coega! 

No doubt Nedlloyd’s construction company will hire a few hundred black handlangers for a while.  But, unlike the vague promises they made our government about “offset” investments, they aren’t nearly so vague in their demands: they will build and operate the new harbour only if the responsible SA government agency, Portnet, can guarantee that it will be profitable.  Portnet must guarantee that 1000 containers will be shipped through it each day.  (That when the existing PE harbour is already operating at only 45 % of capacity.) 

Despite all the disadvantages, Gauteng exporters must be persuaded in large numbers to ship through PE.  To do this, Portnet’s sister company, Spoornet, has quietly told shipping agents that rail tariffs per container to PE have suddenly been reduced to R500 below the rate to Durban.  In reality, the rate to PE is being hugely subsidised.  The question is: where are the funds coming from? 

Spoornet must be prepared to absorb a R500 000-a-day loss to ensure that Coega is profitable to its foreign developers (and, no doubt, their “empowered” partners).  In plain language: what Spoornet has so far been railing to Durban at a modest profit to itself and Portnet, it now actively wishes to ship at a R160-million annual loss through PE.  Worse, should the scheme succeed, it is likely to put Durban harbour into a loss situation and precipitate job cuts there. 

The curious thing is that Spoornet doesn’t have the money.  It’s making massive losses.  Senior sources within Spoornet believe the funding for the subsidies is secretly coming from a special account belonging to the department of defence.  The plot thickens.    

With acknowledgment to Noseweek.