ICTSI: End of Brunei contract won’t affect financial performance
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by Land Asia Listings
- February 14, 2017
- Real Estate Updates
- 0
Posted on February 14, 2017
http://www.bworldonline.com/co
PORT GIANT International Container Terminal Services, Inc. (ICTSI) said the expiration of its contract to operate the Brunei port will have minimal effect to its financial performance.
“Our Muara [operation], it expired already… We’re on a rolling renewal now, but I mean its a management contract so I’m not so concerned about it. If they don’t want to renew us anymore, okay lang (it’s just okay),” Mr. Gonzalez said in a recent interview.
“The contract expired… but we only have a management contract, not concession. We wanted to propose a concession, they wanted to go a different way and then the Chinese firm has a lot more to offer not just in terms of port [operations],” he added.
In May 2009, ICTSI signed a service agreement and a hand-over agreement with the Sultanate of Brunei Darussalam for the operation and maintenance of the Muara Container Terminal (MCT) in Brunei. The contract period was for four years, with a provision for a maximum two-year extension.
Early last year, ICTSI told the Philippine Stock Exchange that it received a notice from the director of Ports, Ports Department, Ministry of Communication in Brunei, stating that its services agreement for the operation and maintenance of Muara Container Terminal has been extended for one year — or until May 20, 2017.
“[Revenues] from our Muara operations are marginal… it’s marginal, we won’t even notice it,” Mr. Gonzalez said.
The ICTSI official noted that there is “no” effect even if ICTSI fails to renew its contract for the MCT, since it has “zero” investment and only one personnel manning its operations there.
ICTSI proposed to have a long-term concession with the Brunei government to further develop the Port of Muara into a world-class gateway.
During the Brunei visit of President Rodrigo R. Duterte last October, the port operator expressed optimism for improved investment and trade opportunities between the Philippines and the oil-rich economy and possibly “opening-up” of more opportunities to further develop the Brunei-Indonesia-Malaysia-Phil
“For us, we’re hoping we could expand our contract in Muara so we can pour more investments, create a world-class trade gateway and provide better service to the people of Brunei… ICTSI has built a reputation for itself as one of the most successful port operators in the world. Eight years says a lot about what we have been doing in Brunei,” ICTSI earlier said.
The MCT facilities include a 250-meter quay and occupy a total land area of five hectares, and have a capacity of 250,000 twenty-foot equivalent units.
China has already put up an aggressive investment portfolio in Brunei that includes the development of Pulau Muara Besar, a 955-hectare industrial port complex in Brunei Bay. In September, five trade agreements were signed to boost bilateral trade and help the sultanate tap into the huge Chinese market — including the signing of a term sheet for the proposed establishment of a joint venture company with Guangxi Beibu Gulf International Port Group Co. Ltd to operate and develop the Muara Port.
Guangxi Beibu had said it will develop Muara Port into a world-class international port. It is also keen to develop the Free Trade Zone and Industrial Park in Brunei to cater to various industrial activities and help grow the sultanate’s ports sector.
For the first nine months of 2016, ICTSI’s net income attributable to equity holders rose 4% to $141.9 million from $136.2 million a year ago.
ICTSI is a port operating business and has been developing, managing and operating container terminals and related facilities around the world since 1987. The company and its subsidiaries are currently managing 30 port concessions and terminal development projects in 20 countries across the globe.
