SAMSA exploring acquisition of standby tugs


The South African Maritime Safety Authority (SAMSA) is exploring the possibility of building or leasing two tugs for emergency towing duties.

In 2009 SAMSA conducted a feasibility study which identified the need for two Emergency Towing Vessels (ETVs), mainly to cover the national coastline, and also to replace the existing Smit Amandla tug which is now about 35 years old. The initial study found that the length of South Africa’s coastline and having the availability of only one ageing tug, stationed in Cape Town, was a risk to the country’s marine resources in the event of a pollution threat up either coast from Cape Town.
“The Smit Amandla, which currently services the South African coastline, is now 35 years old. It has become necessary for South Africa to look ahead and plan for the eventual replacement of ETVs,” according to a tender document from the Department of Transport (DoT) which is seeking a new feasibility study on the acquisition of ETVs. The tender for the feasibility study had a closing date of 4 December and was initiated as the 2009 study is “too old”.

The feasibility study aims to determine if the DoT should acquire its own ETVs conventionally or via a Public Private Partnership (PPP) and will look at things like the need for an additional standby ETV, the cost, economic benefit and utilisation, local build vs buy in for foreign yards, impact on shipyard loading in South Africa, development of maritime skills in SA and whether it will be more cost effective to own or lease a vessel.

Eddie Noble: Special Projects at Nautic Africa told defenceWeb that “the vessel(s) must be built locally as it will have a definite positive impact on the maritime sector and economy.
“Regarding the need, I support the idea of two vessels, as it makes sense to cover our large coastline. Tugs should ideally be stationed at Cape Town (for West Coast operations) and Coega (for East Coast operations) – this will allow the tugs to respond fairly quickly in the event of any pollution risk along our coastline. However, the feasibility study will have to evaluate the current utilization of the Smit Amandla, and also predict the future utilization of the two vessels, i.e. does it make economic sense to run two, or accept the pollution risk is there if only one vessel.
“Regarding leasing or outright purchase, I believe this depends upon the ownership model that the DoT wants to follow and is the output of the Feasibility Study. Leasing allows the vessel to be funded from operational funds, rather than CAPEX, that means that the vessels do not have to wait for approval of high cost capital projects, which often attracts political interest and delays. Depending on the leasing model applied, the User (DoT or SAMSA) can essentially get a service (vessel) which is maintained according to agreed specifications and availability, without having to worry about the support and upkeep of the asset. This is always the advantage of leasing. In general, government departments don’t have this capability, and have to outsource it a huge expense.
“If a PPP model is chosen, then the assets and utilization thereof are shared between the Government and Service provider in a way that makes mutual economic sense. However, there are not too many successful PPP projects that I am aware of, mainly due to the enormous amount of red-tap involved and the timeline to get the process approved and up and running.”

With regard to benefit to the industry, Noble told defenceWeb that as per SA Navy projects Hotel, for a new hydrographic vessel, and more so Biro, for inshore and offshore patrol vessels, local build of the new ETVs should be mandatory. “This not only ensures a more sustainable shipbuilding industry in South Africa, but also ensures that local content of equipment and services is maximized, thus ensuring easier local support of the vessel throughout its operational life.
“I believe that the government should be taking a holistic view of the local shipbuilding industry, and play a part in the sustainability of its three main shipyards, ie Nautic, Damen and SAS. All local shipbuilding projects should be allocated evenly across each yard, so as to ensure a balanced load of local ship production. This will boost the employment in the sector considerably, and ensure its sustainability way into the future. There are enough Government projects around (Tugs, Hotel, OPV, IPV, ETV, research vessels, etc.) to ensure this even-spread will benefit all yards simultaneously.”

Prasheen Maharaj, CEO of Southern African Shipyards (SAS), had a similar outlook, and was unanimous that the Smit Amandla needs to be replaced, with two vessels (one for each coastline).

Maharaj told defenceWeb that a long-term public private partnership would be the best way to proceed with such a purchase, especially as the government has a cash flow problem. “For me a long term public private partnership would be an ideal situation, then you get the private sector guys to invest and the government can give them a long term contract without spending money upfront.” By building ships locally, jobs are created and once the vessels are delivered they should be given to a local company to manage and operate with a 15 to 20 year concession so that the company can recover its investment, Maharaj said.

He estimated it would cost between R550 and 600 million to build a single tug.

Operation Phakisa

The acquisition of a new tug would be in the interest of President Jacob Zuma’s Operation Phakisa, which amongst other things aims to stimulate the ocean economy. This was launched in 2014. The Oceans Economy part of Phakisa aims to generate R170 billion a year and about 600 000 jobs by 2030 – in 2010, the ocean contributed about R54 billion to South African GDP and accounted for approximately 316 000 jobs.

Some 30 000 vessels transit South African waters every year, making it one of the world’s key shipping routes. However, the South African ship repair industry is relatively small, partly due to deteriorated facilities and high port rates, which has seen the number of ships calling for repairs as well as bunkering drop. Phakisa aims to turn this situation around.

Zuma recently pointed out that of the 30 000 vessels that dock in local ports every year, South Africa only does maintenance on 5% of the vessels. In addition, of the 80 rigs in the Western Cape, only 4 are serviced per year.

The President said the rehabilitation, upgrade and redevelopment of some small harbours, as well as the identification and proclamation of new harbours and their integration with national coastal projects, has begun in order to unlock the economic potential of coastline.

The President said some projects have already commenced, and said a total of R9.2 billion is to be spent to develop Saldanha Bay as an oil and gas hub. He said the phased gas pipeline routes have also been defined. Meanwhile, in November the R650 million Burgan Cape Terminals fuel storage project – which will create 350 new local jobs – was launched in Cape Town. The facility has a storage capacity of 118 670 m3 and includes a five bay road truck loading gantry.

Another Phakisa initiative was celebrated last month when the first of nine new tugs was launched at Southern African Shipyards. The Durban based company received a R1.4 billion contract from the Transnet National Ports Authority (TNPA) for the vessels. TNPA had 29 tugs presently in service nationally, but the requirement for bigger, strong tugboat fleets had increased in line with bigger commercial vessels calling at South African ports more frequently.