The Port Development Board has asked two Kwai Chung terminal operators to clear the last hurdle to the delayed Container Terminal 9 (CT9) project as soon as possible. Wharf Holdings' Modern Terminals (MTL) has yet to reach agreement with the Sea-Land-led Asia Container Terminals (ACT) consortium regarding berth-swapping arrangements following agreement last month on the CT9 land premiums. 'We are saying that we would like them to have the agreement by or before the middle of the year,' board deputy secretary Roger Tupper said. Under a 1996 agreement between the Government, MTL and Hongkong International Terminals (HIT), MTL will give up its two berths at CT8 West to ACT for a lump-sum payment. This means MTL will operate three berths at CT9 while HIT will operate the fourth. Both MTL and HIT also will operate an additional berth each for coastal vessels and barges. ACT, formerly Tsing Yi consortium, gave up its right to build and operate two CT9 berths in exchange for MTL's two berths at CT8 West. Mr Tupper said the terminal operators were aware of the Government's schedule, which was reasonable and fairly flexible. While the negotiations had been a long process, they generally had kept to schedule - like completion of the discussions regarding engineering work by the end of last year, he said. Although nothing has been signed, HIT and MTL have agreed with the Government on a basic figure for the land premiums. The Government has agreed to halve the original $1 billion premium for CT9 to secure a deal with port operators reluctant to build it before 2001, although a source claims the new figure is $400 million. MTL and HIT will reclaim 140 hectares, of which at least half will go to the Government with the balance used for CT9. Mr Tupper said it was up to the developer to decide on the pace of the project after the deal was sealed. Credit Suisse First Boston shipping analyst Charles De Trenck said the reduction in the land premium was a compromise between the Government and the terminal operators which reduced risk for investors in the project. He said although the cost of building the terminal had increased compared with the cost of building a few years ago, the compromise had balanced this factor. Mr De Trenck said that since container throughput growth was up about 7 per cent in the first quarter and trade to the United States and Europe was growing strongly, theoretically the port could be filled by 2003. When the first berth of CT9 is built by 2001, it will provide 650,000 teu (20 ft equivalent units) capacity. DBS Securities Hong Kong analyst Walter Kong Tat-tak said it was obvious the Government wanted CT9 to happen as soon as possible, while HIT and MTL wanted to delay the project to benefit from freight capacity and higher rates. Both terminals now had excess capacity of about 1.5 million teu. By 2001, throughput was expected to rise to 1.8 million teu, exceeding the terminals' total capacity by 300,000 teu if CT9 did not come on stream, Mr Kong said. The shortage would put pressure on rates and this was probably why the Government had cut the land premiums to ensure more capacity was put on-stream before Kwai Chung terminals filled up, he said. The implications for Hutchison and Wharf were lower capital expenditure because of the lower land premium, Mr Kong said.
