The port operator said 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,” it said.
Executive chairman and group managing director 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,” he said.
Ruben added that everyone is looking forward to going green and becoming more environmentally friendly, and acknowledged that it is a reality that this shift in operations costs money.
“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, G Gnanalingam who is the founder of Westports, and I am committed to perpetuating his legacy,” he told Bernama.
Tariff revision
Ruben said 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 said the tariff revision Westports seeks is in the process and will by no means be 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% higher.
“The impact of the last tariff revision was also negligible and if you do some calculation, it was 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 was minimal.
Previously, research houses expected Westports’s earnings to increase next year should the government agree to the Port Klang operator’s request to revise its tariff.
AmInvestment Bank Research estimated that a 10% increase in tariff could raise earnings by 25% in the financial year of 2025 (FY2025), while CGS-CIMB Research pencilled in a 15%tariff hike in September 2025 and another 13% in September 2028.
As at 1.09pm, Westports’s share price was up by three sen or 0.78% at RM3.86, giving it a market capitalisation of RM13.16 billion.