BUT IT'S A DUBIOUS DEAL: Penang Port says losing millions due to delayed privatization to Syed Mokhtar

GEORGE TOWN — Penang Port is losing business and major business contracts worth tens of millions of ringgit while waiting for Putrajaya to seal the port privatisation deal with tycoon Tan Sri Syed Mokhtar Al-Bukhary’s Seaport Terminal (Johor) Sdn Bhd, Penang Port Sdn Bhd (PPSB) said today.

The federal government had decided to award the management of the northern gateway back in December 2010 but until now, Penang Port is still waiting for the deal to be finalised to get back to “business as usual”.

“We have been left in a limbo so we can’t do business as usual when contracts can’t be finalised, dredging to deepen the channel can’t be done, new machinery can’t be purchased to smoothen port operations and business deals can’t be signed because we have to wait for the new owner to make all these decisions,” said PPSB managing director and chief executive officer Datuk Ahmad Ibnihajar.

He lamented how the delayed privatisation deal had affected a major portion of port operations and employee morale.

“The dredging has been delayed for more than three years and our 10th Malaysian Plan budget of RM350 million was also cancelled because of this privatisation,” he said in a press conference after a safety campaign and blood donation drive at Swettenham Pier this morning.

He pointed out that the port’s profit had dipped significantly last year, with profit after tax only RM16 million when it should have been RM26 million.

“We used to make RM50 million to RM60 million and this year, if we are not careful, we might not make it because last six months, we have been losing money and luckily in the third quarter, we make more money so we just might make a five per cent increment profit,” he said.

The company would have suffered losses of up to RM15.9 million last year if not for the tax credits of RM32.2 million to boost up its profit to RM16.3 million.

“This year, we don’t have any more tax credits so we are on our own,” he said.

The delayed privatisation has also caused the port to lose a RM50 million to RM60 million business deal with a Belgium company.

“They have invested close to half a billion in Malaysia to export limestone from here, through Penang Port, but the deal fell through when we can’t do dredging to deepen the channel to allow their bigger vessels to come in,” he said.

The limestone project is expected to export between three million and five million tonnes per year at RM16 per tonne but Ahmad said the whole deal was cancelled because the dredging could not be done until the new owner of the port takes over.

“We failed them and now they are cancelling the whole project and going elsewhere since it can’t be done here.

“Our channel is not deep enough so big ships are not coming in and many have reduced their port call here because of this,” he said.

The channel depths now are at 11m and needs to be deepened to 14m to allow access for bigger vessels.

“Even to dredge, it takes 18 months so after the privatisation, it will take at least two years before the port can recover as ships need time to add the port to their route,” he said.

The port’s projection was to achieve profit of RM100 million by 2015 but Ahmad said due to the delay in privatisation, this is no longer possible.

He said that because of this delay, the government was also not giving the port it’s tariffs despite other ports getting it.

“The privatisation needs to be done as soon as possible so that dredging can be done, operations can resume as normal instead of this waiting game,” he said.

PPSB had purportedly asked the federal government for updates on the privatisation deal but in response, they were merely told to wait.

PPSB had proposed other plans for the port such as floating its shares on Bursa Malaysia and asking for injection of funds from the federal government so that it could conduct dredging works that costs up to RM400 million and sustain its operations.

“The federal government said no, they announced the privatisation and so now, we are just waiting,” he said.

Penang ferry suffering loss. — Picture by K.E. Ooi

“Now with the Penang Second Bridge, we have to stop or change the mode of operations of the ferry but we can’t do anything because we have to wait for the new owner to come in and decide’“ he said.

PPSB had previously proposed lighter crafts in replacement of the ferries as it is no longer viable to run the ferry but it could not do it without funding.

“There are no more reasons to have ferries as it is costing us close to RM20 million every year, it is no longer corporate social responsibility for us to keep running a losing business,” he said.

For years, since the 1980s and the completion of the first Penang Bridge, PPSB has been suffering losses in its ferry operations.

“It is up to the government, to get someone else to do this as it is public transport and it is wrong to ask us to keep doing it,” he said.

The ferries are only fully utilised during peak hours of between 8am and 10am and 4pm and 6pm but ferry operators are working in full force the whole day through.Penang port lost millions while in limbo over its privatisation.

— Picture by K.E. Ooi Penang port lost millions while in limbo over its privatisation. — Picture by K.E. Ooi

Malay Mail