Saldanha zone’s ‘free port’ status punted as key oil services drawcard

13th February 2015

By: Terence Creamer

Creamer Media Editor

  

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The establishment of a customs control area (CCA), or free port, within the newly designated Saldanha Bayindustrial development zone (SBIDZ) is being held up as a major drawcard for potential oil and gas services investors into the 330 ha site, situated alongside South Africa’s deepest natural harbour.

The SBIDZ is South Africa’s first sector-specific IDZ, having been designated in October 2013 as an oil and gas services complex to focus primarily on business opportunities arising from the growing West and East African exploration and production markets. But it will also seek to attract passing rig repair trade, with about 120 units towed around the West Coast yearly to rig services centres in Asia and the Middle East.

SBIDZ Licensing Company business development executive Laura Peinke says priority is currently being given to improving the zone’s attractiveness as an investment destination by cutting red tape and tailoring the incentives to the specific needs of the oil services sector.

The IDZ’s CCA status is viewed as a key incentive, as it relieves companies operating within the zone from import duties on manufacturing assets, as well as any goods for storage and raw materials used in the manufacturing process.

Investors will also be exempt from export duties on goods exported from the CCA to a foreign country and on services rendered within the IDZ.

In addition, no value-added tax will be payable on goods imported for use in the construction and maintenance of the CCA’s infrastructure, or on land acquired or rented in the CCA, or on the electricity and water supplied.

Investors will also benefit from reduced corporate and income tax rates and double taxation agreements will be enforced to ensure that companies and individuals are not double-charged in different jurisdictions.

Peinke acknowledges concerns about the possible negative effect on investors as a consequence of the recent sharp fall in the oil price. However, she remains optimistic that the zone’s economic rationale remains intact and that Saldanha Bay is ideally suited to attract companies aiming to position themselves for Africa’s longer-term offshore growth prospects.

For this reason, work is proceeding on a number of projects within the zone, including water treatment, transport, waste and security infrastructure. Contracts will also be awarded soon for the development of a construction site camp, which will incorporate accommodation and offices for contractors.

Also envisaged is an access complex housing the South African Revenue Service and the Department of Home Affairs so as to offer a one-stop-shop service designed to reduce administrative delays and regulatory impediments to investors and their prospective clients.

A memorandum of understanding has been signed between the SBIDZ with Transnet Ports Authority (TNPA), outlining a shared vision for the IDZ and the harbour itself, including the creation of a range of critical port terminal projects.

Tenders will be released soon for the development of a rig repair berth, able to accommodate at least two submersible and semisubmersible rigs simultaneously, as well as a jetty extension to service other vessels used by the offshore industry.

The TNPA does not intend investing directly in the infrastructure, which is likely to involve capital commitments of around R10-billion, and is premising the tenders on a build, operate, own and transfer model.

Peinke reports that it is in ongoing dialogue with potential investors and the licensing company remains optimistic of attracting investment in the not-too-distant future.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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