GEORGE TOWN (July 19): The future of the Penang Port was placed under the lens of public scrutiny again when the federal government dismissed any possibility of an open tender in its controversial privatisation.

Acting Transport Minister Datuk Seri Hishammuddin Hussein, during the current meeting of Parliament, put the lid on a suggestion that the tender for the port's privatisation be re-opened.

In his reply to Bagan MP Lim Guan Eng, who is the chief minister of Penang, Hishammuddin insisted that negotiations with the successful company are already being finalised. "Because of that the question of reopening the tender does not arise," he emphatically said.

Lim, on the other hand, has argued that there should be an open tender. The contract for the chosen company has still not been finalised almost two years after the restricted tender was processed.

(The privatisation through equity ownership in Penang Port Sdn Bhd (PPSB) was done by the Public Private Partnership Unit (UKAS) under the Prime Minister's Department.)

Why is the fate of the Penang Port - the oldest operating port in the country - a contentious issue?

For one thing, the port's privatisation has been decided unilaterally by the federal cabinet without any consultation with the state authorities.

The company reportedly chosen for the tender is Seaport Terminal (Johor) Sdn Bhd, which operates Port of Tanjung Pelepas (PTP) in Johor.

Seaport Terminal is owned by tycoon Tan Sri Syed Mokhtar al-Bukhary.

State's suspicions of "sinister conspiracy"
Now there is a frustration among the state leadership that it is unable to intervene in the future of the port, located on its own land but controlled by the federal government

From the Penang government's perspective, there is a "sinister conspiracy" is in the making, to ostensibly stifle Penang's economy and industrial prowess.

In May last year, several state DAP leaders questioned if the privatisation bid by Syed Mokhtar would only make it a feeder port for his operations in Johor.

Penang Port had recently bought seven Super Port Panamax cranes, which can cater for 8,000 TEU vessels.

But at the same time, the federal government had still not implemented a crucial project to deepen a northern section of the Penang Channel.

This RM353 million dredging project, which was approved a few years ago, is necessary to allow passage for ships that can carry cargo of such great size.

There is concern that Seaport Terminal may potentially engage in "asset stripping" of the Penang Port by bringing the cranes to the Port of Tanjung Pelepas.

"It is strange that the government approved the purchase of the cranes but did not dredge the port," said state executive councillor Chow Kon Yeow.

He even expressed anxiety that the dredging may not take place once Syed Mokhtar takes over.

And this fear was confirmed by Hishammuddin in his parliamentary reply.

"On the project to deepen the Penang Port and all aspects regarding the ferry service, they would be the responsibility of the company that would take over the management of the Penang Port soon," the acting Transport Minister said.

Political intrigue over port's future
The political intrigue in this whole matter was deepened by the appointment of MCA president Datuk Seri Dr Chua Soi Lek as the chairman of the Penang Port Commission (PPC) in November 2010.

Chua was later challenged by Chow, who is the Penang DAP chief, to deny having rejected the proposal to dredge the Penang Channel during a meeting of the National Economic Council on August 8, 2011.

Chow has said that the decision to choose tycoon Syed Mokhtar to take over Penang Port was endorsed by the cabinet on November 25, 2011.

This decision was first confirmed by the federal government in a parliamentary reply from the Transport Ministry to Bukit Mertajam MP Chong Eng who had asked for an update of the port's privatisation last year.

Chief Minister Lim, the DAP secretary-general, was more biting in his remarks, saying that Chua had "sold the rights of the Penang people."

Lim has also lamented that the state administration wrote to Prime Minister Datuk Seri Najib Razak in December 2010 expressing its interest to take over the port, but there was no reply.

The DAP last year launched a 'Return the Port to Penang' campaign to rally people against the privatisation move.

However, it is a fact that the port has never been run by the state since independence, and that all ports in the country are under federal jurisdiction.

The port is currently operated by Penang Port Sdn Bhd, which is under the Finance Ministry, while the Penang Port Commission, an agency under the Transport Ministry, acts as a regulatory body.

The untapped potential of Penang Port
Many quarters believe that the Penang Port has enormous potential, but has not been allowed to fully exploit it.

For one thing, the port's location gives it huge potential to tap on the lucrative market catchment around the Indian Ocean, including India, Bangladesh, Thailand and northern Sumatra.

PPSB's managing director and CEO, Datuk Ahmad Ibnihajar, a local Umno strongman himself, has also expressed frustration over the whole matter.

(PPSB's top posts are traditionally given to local Umno representatives. The chairmanship is currently held by Umno's Balik Pulau MP Datuk Seri Dr Hilmi Yahaya.)

Ahmad had, for instance, warned that PPSB stands to lose from RM50 million to RM60 million a year, as a major shipping company with assets of about RM20 billion wants to transport steel from a plant in Prai to a port in India, but is unable to do so as the current depth does not allow large ships to pass through.

Deputy Prime Minister Tan Sri Muhyiddin Yassin had announced in April 2010 that the delayed channel dredging scheme would be included in the 10th Malaysia Plan.

The project has still yet to take off. The port needs to be deepened from the current 11.5 metres to 14.5 metres to receive large transhipments from 4,000 TEUs (20-footer equivalent) to 8,000 TEUs per vessel.

Strangely, even Barisan Nasional leaders in the state were not aware of the details of the port's privatisation.

When queried by reporters this is what the then state BN chief Teng Chang Yeow, a former state executive councillor, had to say in June last year: "Obviously many things are happening that we are not aware of… We want to know how the privatisation came about."

Ultimately, the controversy boils down very much to the issue of the federal government exercising complete control over key infrastructure of the country, disregarding the input and interest of local authorities.

The tussle over the Penang Port, as it unfolds over the next few months, may very well reflect the federal power play of the political party in control, over those who only govern locally with no effective say in the decisions made at the national level.