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Send  Share  RSS  Twitter  30 Jan 2012

DEVELOPMENT: Saldanha's IDZ In The Dock


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THE Saldanha Bay Industrial Development Zone (IDZ) feasibility study is admittedly a noble initiative. But the West Coast’s long standing Cinderella status as an economic hub does prompt the question whether the proposed IDZ is another well-intentioned effort that lacks practical purpose…and ultimately won’t garner the necessary private and public sector support. Indeed, so called induced industrial clusters have a chequered history. Atlantis remains a less than vibrant industrial hub, while the Coega development near PE is yet to convince of its viability.

What CBN does find encouraging around the Saldanha Bay IDZ proposals is the idea to latch onto the increased demand globally for ship repair services – an initiative that could have a marked impact on job creation on the West Coast.

A growth rate of 3.1% going forward has been forecast, which might not seem like a lot but it’s worth remembering the industry generates large amounts of direct and indirect revenue. Economic development agency Wesgro – which is one of the prime movers of the Saldanha Bay IDZ – points out that just a small increase in growth can have significant impact.

Wesgro says industry participants have indicated that it would cost a shipping company between $2 million and $3 million for seven 7 days work on a 50 000 dry weight ton vessel in Cape Town, the spin-offs from this feed second and third tier suppliers and service providers. Wesgro argues that in terms of catering for the needs of the offshore Oil & Gas industry, the development of marine repair facilities will most likely be the main anchor in Saldanha Bay and will influence the development and viability of an Offshore Supply Base (OSB).

The big question, though, is whether the private sector is really geared to fund and develop infrastructure developments at Saldanha Bay.

It’s a sprawling spend – including the upgrade of repair quays, creation of new repair quay and a dry dock for repair, conversion and fabrication of vessels. Wesgro, though, sounds hopeful. They say presentations to and negotiations with government stakeholders are well under way, and “there is a very real possibility of going ahead within the next five years.”

But Wesgro admits success will be dependent on the ultimate pricing of the services, the quality of the services, the reputation of the operator, the types of vessels that are attracted to the port and even ship repair developments in major oil producing nations such as Angola and Nigeria.

Wesgro says: “What is clear is that, should a private company overcome the challenges of gaining a license to operate and then finding a target market in which to compete, this project could have far reaching, positive implications for the IDZ.”

Wesgro also stresses that if the planned OSB development goes ahead, Saldanha is likely to become more attractive as a trans-shipment and supply destination. This would surely influence ship owners’ decision to mark the port as a chosen servicing and repair destination.

The devil, of course, is in the detail. Slightly worrying is Wesgro admission that the exact nature of the docking facilities (either a graving dock, floating dock or shiplift) is still unclear given that stakeholders seem to have ‘vastly different opinions’ on the matter.

If it’s any consolation, the final decision on the exact nature of docking facilities is unlikely to make a huge difference to the required investment. Wesgro estimates capital expenditure of around R1.6 billion is needed with roughly R750 million to be spent on quay infrastructure and the remainder on dry docking facilities. Sceptics of the IDZ initiative will probably keep tabs on this aspect of the proposals. Indeed, if maintenance and repair services required for West African oil and gas industry are really going to grow at a rate of knots there should not be too much faffing around this initiative.

After all Saldanha would be perfectly positioned for operators operators scouring the West African coast for oil and gas, who are currently enduring the inconvenience of being serviced out of far flung facilities in Aberdeen and Houston.

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