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Friday, 13 July 2018

(The Edge Financial Daily) Port projects under scrutiny

(Subtitle) Carey Island development now requires parliament’s approval

STORIES BY ADAM AZIZ

PORT KLANG: After the focus on rail projects in the new government’s austerity drive, attention has now shifted to a proposed giant port in Selangor and an offshore development in Melaka.

Transport Minister Anthony Loke said the proposal for a RM200 billion port and industrial city project on Carey Island will now require the approval of parliament, and also be subjected to a feasibility study. As for the RM43 billion Melaka Gateway project, which includes a deep-sea port, Loke said no sign of work has been seen at the development site.

Speaking to reporters after making a working visit to the Port Klang Authority (PKA) office, Loke said the proposal for the Carey Island development will be tabled in parliament in the “near future” and if approval is obtained, a study will then be conducted to determine the project’s viability.

The ambitious Carey Island project includes developing a port at a cost of RM140 billion that will have a capacity far exceeding that of Westports and Northport in nearby Port Klang.

Loke said the feasibility study to be commissioned by PKA and carried out by independent consultants will determine if there is a need for a third port in the area.

“Right now, [the project] is actually at a very initial stage. There was no approval given by the previous government for a third port,” he said.

The project, if approved, will be driven by private initiative, said Loke. “[But] we have not received any proposal, any quotation [from any firms on the project],” he said. PKA general manager K Subramaniam was upbeat about the need for Port Klang to expand — although the timing, the scale and the costs will need to be looked into.

“We have to move forward,” he said. “Development of ports is a long-term initiative. [But] any decision will go through the government, and we are keen to conduct the study.”

Talk of a third terminal in the Port Klang area has been going on for years, with mixed views among stakeholders over the proposal to build a gargantuan port on a 100 sq km area in Carey Island with an annual throughput capacity of 30 million containers.

The port will be developed concurrently with a maritime city comprising industrial parks, free trade zones, and commercial and residential buildings.

In April last year, MMC Corp Bhd’s unit MMC Port Holdings Sdn Bhd, and Sime Darby Property Bhd signed a memorandum of understanding with India’s largest private port operator, Adani Ports and Special Economic Zone Ltd, to study the feasibility of the development on Carey Island.

The viability of the project has come into question after the previous Barisan Nasional government gave Westports the green light to undertake its RM800 million

“Westports 2” expansion last year. Loke yesterday said that while the upgrade to Westports 2 has received approval in principal from the previous government, certain technical studies will still need to be conducted before the project can move forward.

Carey Island, which is dominated by oil palm plantations, is also famous for its seafood delicacies. It is also home to the Mah-Meri Orang Asli tribe who retain their unique culture and way of life despite successful assimilation into the modern age.

Meanwhile, the Melaka Gateway development, which was scheduled to commence operations by March 2021, may be facing hiccups. Loke said no sign of work has been seen at the development site near Pulau Melaka, and the relating approvals for its maiden proposed facility — the Melaka International Cruise Jetty — have lapsed.

“We notice there are a few issues with the project. There have not been any signs of development at all,” he said.

“The technical approvals given by the department of environment and department of irrigation and drainage to KAJ Developments Sdn Bhd in 2016 [for the cruise jetty] have lapsed.

“As of now, we haven’t seen any development. Of course, they will not be able to do (start work) now because the necessary approvals have expired,” he added.

The Melaka state government first announced plans to build a deep-sea port under the Melaka Gateway project with private entities KAJ Developments and Powerchina International Group Ltd back in November 2016. The port was scheduled for completion by 2019, with the whole gateway project ready by 2025, according to reports.

At the time, KAJ Developments raised eyebrows after it bagged a 99-year operating lease over the proposed port, as opposed to the usual 30-year term practised for other deep-sea ports in the country. KAJ Developments, said Loke, was awarded “the rights to operate and manage port facilities and services at the integrated deep-sea port Melaka Gateway at Pulau Melaka 2, 3 and 4; and a cruise terminal at Pulau Melaka 1” by the previous transport minister.

He said the operating lease granted to KAJ is conditional upon KAJ commencing operations of the port by 2021.

“The 99-year operational lease can only be activated if all facilities have been completed and begin operations by March 6, 2021, failing which, the licence will be invalid,” said Loke.

The Melaka Gateway, said Loke, is under the purview of the Melaka Port Authority. The body, he said, is in turn answerable to PKA’s management which also manages the port authority in Melaka. “I have instructed [the] PKA general manager to issue a letter to KAJ Developments to request for their response and an update on the project status,” he said.

Since Pakatan Harapan won the May 9 polls and took over both the federal and Melaka governments, there have been speculations that the project would be shelved. On June 2, it was reported that the state government was reassessing the project before making a decision on its fate.

However, on June 29, KAJ chief executive officer Datuk Michelle Ong told reporters after her meeting with the Council of Eminent Persons that the Melaka government had not issued a stopwork order on the project, and that the development had already attracted billions of ringgit worth of foreign direct investment.

She said the project was going smoothly with China state-owned Powerchina International Group as its engineering, procurement, construction and commissioning contractor, and that there has been no effort to rescale the project size.