The pursuit of sustainability by Westports

KUALA LUMPUR: Westports Holdings Bhd is all set to go green with the development of the Westports 2 (WP2) container terminal, for which it has secured a 58-year extension until 2082 as it is actively testing and evaluating the electrification of port vehicles and equipment as part of its commitment to sustainability.

The new concession, which runs from 2024 to 2082, will comprise the existing port facilities in Westports, upgrading terminal operating equipment and additional facilities that will be developed during the concession period, with an investment totalling RM39.6 billion.

The extension reflects a positive outlook and underscores the strategic importance of Malaysia, particularly Port Klang, as a key player in global container shipping, a premier gateway port and a key transshipment hub.

Executive chairman and group managing director Datuk Ruben Emir Gnanalingam said the development of WP2 will be done through internally generated funds and will tap the shariah-compliant capital markets, if needed.

"The electrification of port vehicles and equipment would position Westports to adjust to changing market dynamics.

"Everybody is looking forward to going green and becoming more environmentally friendly, and it’s a reality that this shift in operations costs money. Westports’ pursuit of going green and towards sustainability is part of a broader strategy of future-proofing its business, improving its competitiveness and resilience,” he told Bernama.

Tariff revision

Ruben emphasised that it is equally important to recognise the monetary implications that accompany these transitions, particularly in an environment of rising inflation rates.

"Therefore, a timely tariff revision would help to cover inflationary cost pressures, supplement the transition costs and WP2 project development,” he added.

He elaborated that the tariff revision Westports seeks is in the process and will by no means guaranteed by the government.

"If that tariff increase is granted by the government, it would positively impact the whole of Port Klang’s terminal operators and not just Westports.

"Should the government grant such a tariff increase, there would still be a gap between the desired tariff and the rising cost of operations and development due to inflationary pressure,” he said.

Ruben emphasised that tariff revision would enable Port Klang to catch up with regional ports like Jakarta and Manila, where tariffs are more than 50 per cent higher.

"The impact of the last tariff revision was also negligible and if you do some calculation, it is very minimal,” he added.

Addressing concerns about the impact of tariff hikes on the total purchasing costs to end-users, Ruben reassured that the impact passed on to consumers is minimal.

For context, Port Klang was granted a tariff revision more than a decade ago. He detailed the proposition procedure that commenced in 2012 and was approved in 2014 in preparation for implementation in 2015.

A subsequent revision, which had been planned for 2018 was ultimately rescheduled for 2019.

"Since these tariff revisions occur every 10 to 15 years, the present time is appropriate for the subsequent cycle," he explained.

Previously, research houses expected Westports’ earnings to increase next year should the government agree to the Port Klang operator’s request to revise its tariff.

AmInvestment Bank Research estimated a 10 per cent increase in tariff could raise earnings by 25 per cent in the financial year of 2025 (FY2025), while CGS-CIMB Research pencilled in a 15 per cent tariff hike in September 2025 and another 13 per cent in September 2028.

"For Westports, we have started our sustainability efforts and journey long before taking into consideration any tariff revision. Sustainability held immense significance for my father Tan Sri G Gnanalingam who is the founder of Westports, and I am committed to perpetuating his legacy.” he added.- Bernama

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Ruben , Westport , Port Klang , Tariff


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