Samalaju Port proof of effective collaboration

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Medan during the interview with BAT7.

Chief operating officer of Samalaju Port Matshalleh Mohamad Elti (left) and consultant of the project Roland Ling of KTA (Sarawak) Sdn Bhd (third left) giving an insight of the project to BAT7 team members Phyllis Wong and Peter Sibon.

KUCHING: Bintulu Ports Holdings Bhd’s (Bintulu Ports) recently completed RM1.8-billion Samalaju Industrial Port Sdn Bhd (Samalaju Industrial Port) is proof of effective collaboration efforts between the federal and state governments.

Located on the South China Sea, the port officially started operation in April 2014 at an interim phase basis but has since commenced full operations or ‘Phase 1 Operations’ on June 6, 2017 following the recent full completion of all its facilities.

The completed port is now boasting a total 18-million tonne capacity of cargo per annum, which brings Bintulu Port’s total cargo capacity to 93 million tonnes per annum.

According to Bintulu Ports group chief executive officer Dato Mohd Medan Abdullah, the project’s official completion is on schedule and on budget, and has been a combined effort between all relevant parties involved in the project.

“The project has been a massive undertaking and when you do projects of this scale with billions of ringgit in expenditure and so many parties dependent on its success, its timely and orderly completion is a huge accomplishment and relief to see,” he said during a recent interview by The Borneo Post Adventure Team 7 (BAT7) led by editorial director Phyllis Wong.

He went on to note that the main challenge of the project has been its implementation and coordination stages as a high level of communication and collaborative efforts between its board and relevant parties were needed in order to ensure that all necessary approvals were obtained for the project to proceed at every step of the way.

“As such, we need to thank all the relevant parties that were involved in this large scale project, and it’s not just the people in the ports but everyone including the relevant authorities who have placed commitment and support into ensuring the project’s materialisation and completion.

“And while the project has been a strategic investment of both the federal and state governments, it is also proof that if we work together we can achieve good things.”

Additionally, the completion of Samalaju Industrial Port is also expected to contribute to a steady revenue stream to Bintulu Ports as the port is now ready to handle a higher volume in terms of cargo tonnage and vessel calls, thereby contributing more to the Group’s revenue as compared to its interim operations phase.

However, even during its interim phase, the port has already been observed to be contributing significant amounts to the Group’s financial results as the industrial port posted a revenue of RM3.93 million from port operations in the first quarter of financial year 2017 (1QFY17).

Year over year (y-o-y), this was a staggering 351.72 per cent increase in revenue and attributed to a significant contribution to the Group’s overall 1QFY17 operating revenue of RM161.05 million which saw a 13.5 per cent y-o-y increase of RM19.15 million.

And the uptrend is expected to continue from here on as the port’s cargo throughput in 2016 was reported to be at 450,019 tonnes but has been guided by management that it is anticipated to reach over 11 million tonnes in 2019 when all the industries achieve maximum throughput.

“Cargoes handled will include Ferrosilicon, Coke/Semi Coke, Manganese Ore, Metallurgical Coke, Silica Quartz and Anode Carbon,” Medan said.

While the boost in throughput is expected to firmly set the port on a steady revenue stream to help recoup investment made, Medan notes that the Group will initially see some downward impact in the near-term of two to three years as the port goes through its gestation period.

“As is normal in part of the investment cycle, there will be growth in terms of revenue at Samalaju but its expenditure relating to amortisation of equipment, infrastructures and concessions assets as well as the sukuk financial charges will initially have a downward impact on the overall performance of the Group.

“However this is a temporary short term result and the Group performance is expected to rise in the coming years once Samalaju Industrial Port starts to handle increasing volume of cargo generated for the Samalaju Industrial Park.”

Previously, the AA1(s)/Stable rating of Samalaju Industrial Port’s Sukuk Murabahah programme of up to RM950 million has been reaffirmed by RAM Rating Services Sdn Bhd in light of the unconditional and irrevocable corporate guarantee extended by Bintulu Ports.

Looking forward, Medan who has over 30 years of well-rounded experience in the oil and gas industry (O&G) said the Group would continue to contribute to the industrialisation and economic development of the state by providing port and terminal operations, and logistics and marine services.

In turn this is expected to contribute to the local O&G industry and act as a catalyst for the growth of the Sarawak Corridor of Renewable Energy (SCORE) initiative.

“We hope that the state’s economic development will translate into cargo generation and demand for shipping service.

“Ultimately, we anticipate the volume of cargo to increase and create much demand to sustain and excite the shipping sector. It is all about having the right cargo demand.”

Medan declared that as a category, the LNG and O&G industry will continue to be the biggest contributor to the growth and business sustainability of the Group.