The Saldanha Bay Industrial Development Zone (SBIDZ) is working with 58 prospective tenants for the special economic zone (SEZ), which is the first SEZ to be located within a domestic port and the only sector-specific SEZ in South Africa catering specifically to the oil and gas, maritime fabrication and repair industries and related support services.
Situated in the commercial deep-water Port of Saldanha Bay, on South Africa’s West Coast, the 356 ha zone was designated as an SEZ in 2013.
Since then, land previously owned by the Industrial Development Corporation has been purchased by the Western Cape provincial government for ownership by the SBIDZ and a lease arrangement has been struck with the Transnet National Ports Authority (TNPA) to open up port-side land to prospective investors.
The SEZ designation and its location in a port enabled a ‘Freeport’ regime for the SBIDZ, effectively enabling engineering service providers to conduct value-adding fabrication and repair activities on vessels without attracting certain duties and value-added tax (VAT).
Additionally, in line with South Africa’s generic SEZ rules, investors in the zone secure a preferential corporate tax rate of 15% and are also allowed to apply for several other incentives as administered by the South African Revenue Service (SARS) and the Department of Trade, Industry and Competition.
SBIDZ acting CEO Kaashifah Beukes tells Engineering News Online that, in July, the zone secured the needed accreditation from SARS as a customs-controlled area across nearly 70% of its footprint, which entitles investors in the SEZ to apply for VAT relief and other duty rebates.
Beukes explains that such relief is particularly important for prospective SBIDZ clients, which have hitherto been subjected to a 15% VAT withholding tax, based on the value of the vessel, when deciding to repair a vessel in Saldanha Bay.
“Given that most vessels are valued at above $20-million, the tax has acted as a major disincentive to servicing a vessel or a rig in the SBIDZ.”
She says the market is already large with an estimated 30 000 vessels sailing through South Africa’s waters annually. However, South Africa’s market share is almost insignificant, with only 5% of the 9 000 port calls made to South African harbours translating into domestic marine-servicing and -repair business.
With its prime location within a day’s sail of the tip-of-Africa trade route – one of three global shipping and logistics routes, with the others being the the Suez Canal and the Panama Canal – the Port of Saldanha Bay and the SBIDZ make for a compelling value proposition to the offshore and maritime industries, where there is a growing need for additional capacity.
Now that the SEZ designation and the customs-controlled area accreditation is in hand, the SBIDZ feels emboldened to intensify efforts to attract investors and Beukes intends using the upcoming Africa Oil Week in November to engage “enthusiastically” with prospective investors.
In the meantime, priority attention is being given to nine high-potential investments, which range from international and domestic oil and gas maintenance and repair companies, to fuel and lubricant suppliers.
The SBIDZ’s location, Beukes argues, positions it well to service a wide range of vessels passing the Southern African coast. In addition, the deep-water nature of the Port of Saldanha Bay, with water depths of up to 23.7 m, means it is able to accommodate vessels of all sizes and the largely greenfield state of the port means there is much potential for additional capacity for berthing.
“Our depth and breadth of knowledge on the oil, gas and maritime sectors uniquely places us to understand market dynamics, trends and barriers to growth,” she says.
“And with the TNPA, under the frame of our latest memorandum of understanding, together we are working purposefully to resolve some key challenges and constraints facing the offshore oil and gas and marine fabrication and repair industries in South Africa and enable a seamless zone and port experience.”