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Penang Port Sdn Bhd chief executive officer Sasedharan Vasudevan says shareholders have recently approved the capex for the first phase expansion, which will allow the container terminal to increase its berth capacity up to 2.9 million twenty-foot equivalent units (TEUs). (Picture courtesy of Penang Port).

PENANG: Penang Port Sdn Bhd is allocating RM180 million for expansion works this year which will involve berth strengthening and purchase of two quay cranes for the port’s operation capacity enhancement.

Penang Port Sdn Bhd chief executive officer Sasedharan Vasudevan said shareholders have recently approved the capex for the first phase expansion, which will allow the container terminal to increase its berth capacity up to 2.9 million twenty-foot equivalent units (TEUs).

“We are still at designing and consulting stages with engineers. The expansion includes widening and strengthening the berth spaces at the terminal,” he told reporters during a media familiarisation visit to Penang Port recently.

Sasedharan said the big chunk of the approved capex will be allocated for the container business to provide container throughput from the current capability of 2 million TEUs to 2.8 million TEUs in the future.

He pointed out the capex will be internally funded by the company as the expansion work is needed for the growing demand of the container business.

"The expansion will eventually allow bigger vessel docking and increase throughput capacity,” he said.

Sasedharan said dredging work will allow channel depth up to 11.5m from the current depth of about 11m, allowing the port operator to expand the vessel size calling its container terminal.

“We believe if the growing trend continues, we will hit throughput 2.2 million TEUs or 2.3 million TEUs in the next four to five years.

“However, we have yet to fill up the capacity. We have to start the work now to meet the future's demand,” he added.

Sasedharan said the expansion work will take between 18 months and 20 months to complete the project, while the commencement is expected by the third quarter (Q3) this year.

“We have done 1.5 TEUs in 2017, representing about six per cent growth year-on-year (YoY). We are currently studying the feasibility studies for the expansion plan,” he said, adding that Penang port employs about 1,500 staff.

Penang Port had allocated between RM30 million and RM40 million in 2016 for the purchase of container yard operations equipment.

The port is also targeting to hit about 1.6 million TEUs or five per cent increase in growth for from last year’s achievement of 1.5 million TEUs.

“1.5 million TEUs in 2017 comprised containerised cargo only and non-containerised cargo with the cargo value ratio of 58 per cent container and 12 per cent of general container, respectively,” he said.

MMC Corp Bhd under its subsidiary MMC Ports Holdings Sdn Bhd holds 49 per cent stake in Penang Port from Seaport Terminal Johore Sdn Bhd in 2016.

According to the company’s filing to Bursa Malaysia, MMC Port has proposed to acquire the remaining 51 per cent stake, representing 37.46 million shares in Penang Port Sdn Bhd worth RM220 million from Seaport Terminal Johore.

Sasedharan said the acquisition of the remaining 51 per cent stake in Penang Port from MMC Ports is expected to complete by the first half this year.

On the potential of increasing automation in port’s operation, Sasedharan said it is still ‘green’ for the port operator to embark on mechanisation in terms of machinery handling.

Shippers at the Penang Port transport 80 per cent of goods to Far East mostly China, Japan and Korea, while remaining 20 per cent to the Middle East and other areas.

He said Penang Port's revenue contribution to MMC Ports was 30 per cent in 2017 with a total of 1.52 million TEUs.

“Last year’s better cargo volume was primarily driven from Southern Thailand, represented about 38 per cent of cargo volume and organic growth from the Northern Malaysia,” he added.

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