Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on January 17, 2022 - January 23, 2022

INTEGRATED Marine Works Sdn Bhd (IMW), a wholly-owned subsidiary of Inai Kiara Sdn Bhd is said to be returning as the concession holder for dredging works at all federal ports in the country, according to sources in the maritime and port industry.

The last time IMW was appointed as the concessionaire for maintenance dredging works at federal ports was in 2004, for a period of 15 years until 2019. However, according to industry sources, this time around, IMW’s concession will include capital dredging and reclamation works.

This will mean that IMW will benefit in a major way from the development of new federal ports or new terminals at federal ports in Malaysia. But port operators see the move as perplexing.

Dredging requires special vessels that are costly but there are many companies in the country that can undertake capital dredging and reclamation.

Without competitive tender bids, capital dredging and reclamation works at federal ports could become more expensive than they need to be, say industry players.

According to the Ministry of Transport, federal ports include Port Klang, Port of Tanjung Pelepas, Johor Port, Penang Port, Teluk Ewa Port in Langkawi, Tanjung Bruas Port in Melaka, Kemaman Port, Kuantan Port, Bintulu Port and Labuan Port.

The Edge reached out to the ministry to comment on the matter, but had not received a reply at press time. Westports Holdings Bhd, the only publicly-listed standalone port operator in the country, declined to speak on the matter and IMW could not be contacted for comment.

Westports is expanding its container terminal with another eight additional berthing areas that will increase the port’s handling capacity from the current 14 million 20-foot equivalent units (TEUs) to 28 million TEUs by 2050. The project is called “Westports 2”.

Under the expansion plan, about 550ha is to be developed for the additional berths, container yards, terminal facilities and containment area. The project will require significant capital dredging and reclamation works.

While the cost of capital dredging and reclamation works at Westports 2 can only be guessed at, an industry source estimates that the bill could come up to at least RM500 million per container terminal.

“If capital dredging is being turned into a concession, the port operators will have to enter into direct negotiation with the concessionaire instead of calling for open tenders,” says the source.

The source also highlighted a 2012 lawsuit by IMW against Bintulu Port Holdings Bhd and the government of Malaysia when the Sarawak-based port operator issued a tender for the development of Samalaju Port.

IMW contended that Bintulu Port ought to have awarded the contract for the dredging of the navigational channel at the Samalaju Port through direct negotiation instead of calling for a tender exercise.

The High Court decided against IMW, and agreed with Bintulu Port that Samalaju Port is a state port and did not come under the concession agreement. Nevertheless, IMW did win some contracts from Bintulu Port for the development of Samalaju Port worth RM437 million through open tender.

Westports 2 is one of the major expansion projects at federal ports currently in the works. Westports is finalising negotiations with the authorities on the commercial agreements for the project.

Apart from Westports 2, Port of Tanjung Pelepas is also expanding its container terminals with RM750 million in capital expenditure this year to increase its handling capacity to 12.5 million TEUs from the current 11.5 million TEUs.

IMW was established in July 1993. In 2004, the company — then a joint venture between Inai Kiara and Tan Sri Syed Mokhtar Albukhary’s Seaport Terminal (Johore) Sdn Bhd — was awarded the concession for dredging works at federal ports for 15 years.

According to filings with the Companies Commission of Malaysia (CCM), IMW is now wholly-owned by Inai Kiara (it is not known when Inai Kiara became the sole shareholder of IMW). Inai Kiara’s largest shareholder, with an 85% stake, is Datuk Gulzar Mohamad Noor Mohamed.

Little is known about Inai Kiara and IMW publicly. A 2013 news report stated that Inai Kiara was the fifth largest dredging company in the world. It also owns Inai Kenanga, a RM1.2 billion dredging vessel which when launched in 2013, was the largest in Asia and the third largest in the world.

According to the CCM filings on IMW, the company was loss-making in the financial years ended Dec 31, 2019 (FY2019) and FY2020. In FY2019, IMW had revenue of RM203.6 million and a loss after tax of RM15 million.

In FY2020, it reported revenue of RM60.6 million and loss after tax of RM603,466 — probably due to the movement control orders during the year. As at end-FY2020, IMW had RM174.7 million in assets and RM122.1 million in liabilities.

 

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