GMG resubmits plan to build third KL port
Glenn Marine Group (Asia) (GMG) has resubmitted an application to build and operate a third port in Port Klang under a private finance initiative (PFI), reported The Edge.
In the submission to the Economic Planning Unit (EPU) two weeks ago, the proposed Centralport is to be located between the two existing ports – Northport and Westport.
The first phase of the port is expected to cost almost US$414.08 million, including the cost for acquiring the land, and is estimated to take four years to complete.
When completed, the port will have a 1.5km long jetty and the capacity to handle three million TEUs and 1.5 million tonnes of cargo per year.
This is the second application by GMG to build and operate the port. GMG had an earlier application in principle rejected in January, although the company claimed it had received approval in principle from the Economic Council (EC) only a month earlier.
"This time around, GMG has received the green light from most government entities. If it gets past the EPU, then the proposal only needs endorsement by the Cabinet, which should not be a problem as the EC approved it in principle in December last year," said a source.
A top official at Port Klang Authority (PKA) would only say "the approvals are still pending", when asked to comment.
According to port industry officials, the proposal is likely to meet with resistance from the existing port operators in that area as the existing facilities still have room for expansion.
"There is still room for expansion and catering for demand in the next eight to 10 years. There is really no need for a third port to come into play now," said a port official.
In its submission, GMG said it has already completed a master plan, a technical feasibility study, a hydrographical study and a land survey.
It contended that at current growth rates, according to a study on the Port Klang Master Plan, the existing operators would be operating at 95 percent capacity by late 2016 to 2018.
"Port Klang will need additional capacity after 2018," said GMG in its application.
In 2010, 8.86 million TEUs or 79 percent of the total capacity of 11.17 million TEUs were handled in Port Klang.
The United Nations Conference on Trade and Development recognises capacity utilisation in excess of 75 percent as congested, said GMG.
According to data from the submission by GMG, capacity utilisation is expected to rise to 97 percent by 2020 despite an increased capacity of five million TEUs in the same period.
Despite the recent weakening in the global economy, container volumes grew 53.33 percent or 10.66 percent per annum from 2005 to 2010. In comparison, Singaporean port volumes grew 4.62 percent per annum in the same period while container volume in Southeast Asia grew 7.95 percent per annum. Port Klang container volumes are expected to grow six percent in 2012.
The company estimates a payback period of 12 years with an internal rate of return of 14 percent. The project, as a PFI, will be funded by asset injection, investment by shareholders and borrowings. As such, the project will pose minimum risk to the government, said GMG.
The land slated for the development of the new port is currently owned by GMG while land and jetty acquisition costs are estimated to be $95.56 million in GMG's proposal.
It further stated that since the proposed location is not a greenfield site, construction time and costs will be relatively lower without the need for earthworks, infrastructure and road works. Furthermore, there is sufficient depth at the proposed site, which removes the need for dredging.
GMG estimates that Centralport will create some 18,000 jobs directly and up to 25,000 jobs indirectly.