Qingdao deal raises confusion
Rivals secure contracts to develop the same port project
The Qingdao Port Authority (QPA) has stood by its decision to award a multibillion-yuan expansion contract to a three-company consortium less than a month after the Qingdao municipal government handed the same project to CSX World Terminals.
The rival claims to Qingdao's Qianwan Phase IV development - potentially a four billion yuan (HK$3.74 billion) project - have sparked confusion about the overall development plan of north China's largest container port.
'We agreed to let P&O Ports, AP Moller and Cosco Pacific develop Phase IV. We have had the understanding since they signed the Phase III investment agreement,' QPA director Tian Guangwen said yesterday. 'I don't know about the deal with CSX.'
P&O, AP Moller and Cosco formed a joint venture in July to develop Qianwan's US$877 million, 10-berth Phase III project. Mr Tian said as part of that agreement the three companies were also given priority to develop Phase IV. 'We are still discussing the share interests for Phase IV,' he said.
This contrasts with CSX's rival claim on Phase IV, stemming from its agreement with the Qingdao municipal government to take a 95 per cent interest in the project. The city will take the remainder.
'I don't want to get in a debate with Mr Tian,' CSX senior vice-president Bill McHugh said in an e-mail communication, adding that there was 'no confusion in our mind' about which company was developing Qianwan Phase IV.
'We are dealing with the mayor of Qingdao and appropriate offices of city and provincial government on this project. We do not disclose the details of our contracts,' Mr McHugh said.
The North Carolina-based terminal operator signed a memorandum of understanding with the municipal government last autumn and a final agreement was concluded on September 2. Construction is scheduled to begin by early next year, with the first four berths operational by 2006.
Qingdao government officials could not be reached for comment yesterday.
Michael Chan, the head of transport and logistics research at Bank of China International, said it was possible the two 'Phase IV' projects could be developed in parallel on separate plots of land. 'I think the related government bodies will honour both agreements,' Mr Chan said. 'There are interesting implications depending on which government departments the operators signed the contracts with.'
While the Qingdao Port Authority is responsible for the port's overall layout and development, the municipal government is the ultimate arbiter of land-use rights.
Qingdao has been aggressively expanding its container handling capacity to consolidate its position as north China's largest port. Last Friday, the municipal government signed a joint-venture agreement with Hong Kong-listed China Merchants Holdings to invest US$500 million in seven berths and logistics facilities at Qianwan. That project alone will boost Qingdao's capacity by about 3.15 million teu (20-foot equivalent units) by 2010.
Qingdao vice-mayor Yu Cong earlier said that overall capacity would be increased to 12 million teu in 10 years.
Qingdao handled 2.08 million teu in the first half of this year, up almost 30 per cent year on year. Throughput for the year is expected to reach four million boxes.
