Friday 29 Mar 2024
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Mohd-Sidik_Penang-Port_29_1056STAKEHOLDERS of Penang Port Sdn Bhd say there have been vast improvements since Tan Sri Syed Mokhtar Albukhary’s purchase of the country’s northernmost container facility.

“There have been improvements in many areas, including turnaround time of vessels and the time taken to respond to queries by port staff. We [shipping agents] are very happy,” says vice-president of the Northern Malaysia Shipping Agents Association Ong Chiang Kheng. Several other people have vouched for the new management as well but did not want to come on record.

With services at the terminal improved, Penang Port is also likely to fare better financially, stemming two years of bleeding.

The turnaround is largely attributable to its new owner, Seaport Terminal Sdn Bhd, a privately held company controlled by Syed Mokhtar.

Penang Port chairman Datuk Mohd Sidik Shaik Osman explains, “We managed to reduce operating costs. We might have achieved either breakeven or perhaps a very slight profit ... our accounts are currently being audited by the external auditors.

“We were particular about how we spent our money. We were cost-conscious. We renegotiated procurement contracts, controlled human resource costs and operated our facilities at a much more efficient level.

“The cost of moving a box [container] is now lower than before. We are in the final stages of refinancing borrowings into a longer tenure to better match the assets,” says Mohd Sidik. Last year, the port handled almost 1.3 million containers.

The numbers for its financial year ended Dec 31, 2014 (FY2014), have yet to be released. 

The port operator suffered an after-tax loss of RM9.1 million on revenue of RM345.8 million in FY2013. As at end-December 2013, Penang Port had long-term debts of almost RM910 million, while its current liabilities were at RM461.9 million. It had non-current assets of RM1.7 billion and current assets of RM96.8 million.

Thus, Seaport Terminal would have had to fork out cash for the port, assume a huge debt and undertake continuous commitments such as dredging (the price tag of the acquisition has never been revealed). So, it doesn’t seem that Syed Mokhtar had obtained a sweetheart deal as many quarters have claimed.    

When asked about the acquisition, Mohd Sidik says, “The information is proprietary and we are bound by the confidentiality clause of the concession agreement.”

What is important, however, is that steps are being taken to ensure that the port is profitable, and that new revenue streams are being developed to boost earnings.

Among the new initiatives are the development of a new bulk liquid terminal to handle liquid cargo such as crude palm oil, vegetable oil and liquid chemicals.   

“There is a lack of liquid facilities in Penang. This [liquid terminal] is something we can grow. We are looking at possible locations. We are talking to the state and evaluating things now,” Mohd Sidik says.

Another area of growth, he says, could be via the building of a free zone area, which will house a regional transshipment centre. “We need to work with the state government. We want to create a transshipment business ... there is potential. Some shipping lines have already expressed interest.”

While new revenue streams are being developed, another aspect of the business that has been weighing down Penang Port may see some changes. The Penang ferry terminal has been suffering annual losses of RM20 million on average for several years.

A proposal is in place to increase the tariff to RM2 for passengers (from RM1.20 — 60 sen each way), RM9 per car (up from RM7), and RM50 for a season pass (up from RM30), but it is facing opposition from many groups.

Even with the increase in ticket prices, Penang Port will see losses of RM17 million a year, says Mohd Sidik.

“We have proposed to the government, the Penang Port Commission, to revise the ferry tariff. We find that RM1.20 is very low. If you take a bus, a return trip is RM2.80. The buses have subsidised fuel, we don’t. It’s impossible to sustain at this price,” he says.  

Penang Port is not held under Syed Mokhtar’s listed MMC Corp Bhd, which has several port operating assets in its stable. However, considering its turnaround, it could be a matter of time before Penang Port is injected into the listed company.

Among the port and transportation assets parked under MMC are Johor Port Bhd, Port of Tanjung Pelepas Sdn Bhd and Senai Airport Terminal Services Sdn Bhd.  

There have also been rumours of a large initial public offering of MMC’s port assets, but this is understood to be a few years away.

 

This article first appeared in The Edge Malaysia Weekly, on March 2 - 8, 2015.

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