DURBAN ECONOMIC UPDATE - ISSUE 1

C O N F I D E N T I A L SECTION 01 OF 02 DURBAN 000062 SIPDIS SIPDIS STATE FOR AF/S - RMARBURG; AF/EPS COMMERCE FOR 4510/ITA/MAC/AME/OA/DIEMOND E.O. 12958: DECL: 10/23/2017 TAGS: ECON EAIR EWWT PGOV SENV SF SUBJECT: DURBAN ECONOMIC UPDATE - ISSUE 1 DURBAN 00000062 001.2 OF 002 CLASSIFIED BY: Eugene S. Young, Consul General. REASON: 1.4 (b),(d) ¶1. (C) IN THIS ISSUE: - Plans for New Durban Airport Approved - Plans for Current Durban Airport Still Under Debate - Succession Debate Hindering Public Service Delivery in Durban - Construction of New Durban Stadium on Target - Environmentalists Accuse eThekwini Health Department of Cover-up PLANS FOR NEW DURBAN AIRPORT APPROVED ¶2. (U) On August 23, the Department of Environmental Affairs and Tourism gave the Airports Company of South Africa (ACSA) permission to proceed with construction of the new King Shaka International Airport and Dube Tradeport in La Mercy, north of Durban. The approval comes nine years after KwaZulu-Natal (KZN) authorities revived plans for a new airport to increase capacity. The new airport will have an initial capacity of 7.5 million passengers per year. The approval came with the caveat that 80 environmental conditions must still be addressed before full construction can begin. ¶3. (U) While the provincial and municipal governments have celebrated the approval, the construction contractor Ilembe consortium, led by Group Five and WBHO, has been less enthusiastic. Mike Upton, Group Five's CEO, noted on August 24 that the "implications of the conditions still have to be assessed on the program and design." Since the approval, eight appeals have been filed in a challenge against the final environmental impact assessment. Earthlife Africa, one of the appellants, objected on the grounds that there "had been no risk assessment conducted on the aviation fuel storage tanks" and that this led to a "risk of explosions, similar to the recent explosion in Durban harbor." (NOTE: See below for background on Durban harbor explosion. END NOTE) Zweli Mkhize, KZN MEC for Finance and Economic Development, said that in spite of the appeals, "we will certainly now be able to finish in time" for the 2010 World Cup. PLANS FOR CURRENT DURBAN AIRPORT STILL UNDER DEBATE ¶4. (C) Plans for the land occupied by the current Durban International Airport remains a hotly contested subject amongst eThekwini Municipality (Durban) officials. On September 25, Pol/EconOff discussed with city officials various proposals for use of the land. Durban Deputy Mayor Logie Naidoo noted that the three main proposals are the creation of a dug-out port to extend the Port of Durban's container capacity, the purchase of the land by Toyota, and the purchase of the land by a petrochemical consortium. ¶5. (C) KZN Growth Coalition CEO John Barton stated that his group's preference is to extend the port. He noted that the growth of the port is "essential" for the growth of South Africa's economy. Durban Chamber of Commerce CEO Bonke Dumisa emphasized that the only "logical option" is the extension of the port if "politics doesn't get involved." Deputy Mayor Naidoo was more circumspect, hinting that not all concerned parties in the municipality have come to an agreement, and noted that the national government would play a large role in the final decision. ¶6. (C) On October 2, Pol/EconOff met with Eric Apelgren, Durban's International and Governance Relations Officer. Apelgren stated that the debate surrounding the proposals for the use of the current airport's land remains contentious. He affirmed that the purchase of the land by Toyota or the petrochemical coalition remained viable options, as Durban would only be able to afford the construction of a dug-out port with financial support from the national government. He noted that the concerned parties would likely avoid further discussion of the petrochemical option, due to opposition of local environmental groups, heightened by the ongoing saga surrounding the explosion at Durban's Island View storage terminal (see below). Apelgren also commented that the national government had the authority to make the final decision, given that the implication of the various options on economic growth were vital to national security. ¶7. (C) COMMENT: The Transnet National Ports Authority, South Africa's parastatal ports authority, has also been studying ways to expand capacity at the port of Durban. Transnet does haveQr options besides digging out the site of the current airport to expand port capacity in Durban. Two viable options are to dig out the southern side of the port at Bayhead or to convert Salisbury Island into a container terminal. Transnet is also discussing the conversion of Richards Bay's container unit DURBAN 00000062 002.2 OF 002 into a full-scale container terminal. If Transnet determines that these options are better than a dug-out expansion using the current airport's land, then Toyota may indeed have a chance at purchasing the land. It is likely, however, that final plans for the land will not be announced until it is certain that the new King Shaka International Airport will be ready by 2010. END COMMENT. SUCCESSION DEBATE HINDERING PUBLIC SERVICE DELIVERY IN DURBAN ¶8. (C) On September 27 and October 2, Pol/EconOff also discussed the impact of the ANC presidential succession debate on public service delivery with Apelgren. Apelgren stated that approximately 80 percent of department heads within the eThekwini Municipality (Durban) are ANC political appointees. He then noted with frustration that department heads' support in the succession race is divided between President Mbeki and ANC Deputy President Jacob Zuma. He said he "couldn't wait for December to be over" so that eThekwini departments can "focus on their jobs, instead of politics." Apelgren said that the tension between certain department heads was becoming "unpalatable," to the extent that some will no longer converse. He also confirmed that the heads know that their time is limited should they support the wrong candidate before December. CONSTRUCTION OF NEW DURBAN STADIUM ON TARGET ¶9. (C) On October 3, Julie-May Ellingson, Head of Strategic Projects for eThekwini Municipality (Durban),took Pol/EconOff on a tour of the new Moses Mabhida Stadium complex being constructed for the 2010 Soccer World Cup. Ellingson said that the stadium was on target for a June 2009 completion. Ellingson said that she hoped to plan an official inauguration ceremony for October 2009, allowing a few months for any delays that may occur. Ellingson stated, however, that while the stadium plans are on track, that plans to increase public transport capacity to the stadium by 2010 are lagging. Further, Ellingson said that while security for the World Cup has been thoroughly addressed, that the overall crime situation in Durban has yet to improve. ENVIRONMENTALISTS ACCUSE ETHEKWINI HEALTH DEPARTMENT OF COVER-UP ¶10. (U) On September 18, an explosion occurred at Durban's Island View storage terminal, located within the Port of Durban. The cause of the explosion is still under investigation. Residents of area neighborhoods were evacuated following the explosion, but told only hours later that it was safe to return home after the eThekwini Municipal Health Department had concluded that the toxins released in the air did not pose a threat. Area residents have now accused the Health Department of a cover-up, after an independent test showed that residents were in danger. Two air samples were taken by the South Durban Community Environmental Alliance on the night of the explosion, and sent to the US for testing. The results of the Alliance's tests reportedly showed that residents were exposed to bromomethane, tetrachloroethylene, and benzene at levels above the World Health Organization's annual limit for exposure. The Health Department has denied the cover-up charges, but acknowledged that the Department has "engaged the services of a specialist engineer to carry out further investigations." YOUNG