Sabah Ports Sdn Bhd

active

In 2004, the Sabah government granted a 30-year concession contract to Sabah Ports Sdn., Bhd. (SPSB) to operate, maintain, and manage seven ports in Sabah, including Kota Kinabalu, Sapanggar Bay, Kudat, Lahad Datu, Sandakan, Tawau, and Kunak. The concession contract was renewable for additional 30 years, and upon its expiry, SPSB should transfer all the new port facilities to SPA. Those ports were previously managed by Sabah Ports Authority (SPA), which transferred their operation to SPSB in September 2004. SPSB was a fully-owned subsidiary of Suria Capital Holdings Bhd. (Suria Capital). Suria Capital was a public-listed company on Malaysian stock exchange (Bursa Malaysia Berhad) and with interests mainly in the State of Sabah. Under the concession contract, SPSB was the terminal operator responsible for all cargo handling and ships operation, while the SPA functioned as the landlord of all wharves, servicing ships on a common-user basis and all warehouses go-downs that served as transit storage warehouse for goods before loading into the ships in respect of export cargo and before collection by consignees or their agents in the case of import cargo. SPSB agreed to invest more than US$ 18.42 million (RM 70 million) to upgrade port facilities, and to pay total concession fees for US$ 55.26 million (RM 210 million). The concession fees included the values of operations of Sabah ports, surplus assets and approximately 23.25 acres in vicinity of the Kota Kinabalu Port land which leaded out for a 99-year term to Suria Capital. They were to be paid as follows: • For the first five concession years, US$ 0.26 million (RM 1 million) per annum; • From the sixth to the tenth year, US4 0.79 million (RM 3 million) per annum and US$ 0.2 (RM 0.75) per ton of cargo handled at the ports in excess of annual threshold throughput of 10 million ton • From the eleventh year on, US$ 1.32 million (RM 5 million) per annum and US$ 0.2 (RM0.75) per ton of cargo handled at the ports in excess of annual threshold throughput of 10 million ton The project was implemented after a few years it was conceived. The concession contract was initially proposed by Sabah State government in June 2001 when it approved the injection of the port operations and identified movable assets of SPA into Suria Capital. This was done through a subsidiary company (NEWCO) to be incorporated by Suria Capital to assume the port undertakings. On 5th June 2002, the Sabah State government approved the terms and conditions of the proposed concessions, and Surai’s shareholder approved them in June 2003.