This article first appeared in The Edge Malaysia Weekly on April 17, 2023 - April 23, 2023

Surprisingly, the federal government has granted Bintulu Port Holdings Bhd an extension of up to 18 months starting July this year, instead of inking a new privatisation agreement with the port operator.

In its latest filing with Bursa Malaysia, Bintulu Port announced that its subsidiary, Bintulu Port Sdn Bhd (BPSB), had received notification that the cabinet had given the green light for it to continue operating the port for an interim period of up to 18 months, pending the finalisation and execution of the new privatisation agreement.

The latest cabinet decision is an extension from last December. At that time, BPSB was given an extension for an interim period of six months until June 30 this year to continue operations until the sealing of a privatisation agreement.

Effectively, the federal government has given BPSB, one of the three ports under Bintulu Port, until the end of next year to firm up a deal.

The privatisation agreement is essentially a renewal of BPSB’s existing operations. Since it should not vary very much from existing terms and conditions, what is holding back the firming-up of the agreement?

Although the federal government has in principle given a 30-year extension for BPSB to continue to operate, nothing is certain until an agreement is signed and sealed.

Petroliam Nasional Bhd is the largest shareholder in Bintulu Port, with a 28.5% stake, followed by the State Financial Secretary of Sarawak, with 26.7%. Equisar Assets Sdn Bhd is the third-largest shareholder, with 13%. The rest of the shares are held by funds.

The Sarawak government has publicly stated its intention to own Bintulu Port. Generally, however, ports are under the domain of the federal government.

Why should the federal government set a precedent in Bintulu Port by giving it away to the state?

Moreover, BPSB is the main gateway for Malaysia’s exports of liquefied natural gas. Its customers include Petronas Carigali Sdn Bhd, Thailand’s PTT Exploration and Production Co Ltd and Vestigo Petroleum Sdn Bhd.

Bintulu Port itself has been regularly paying healthy dividends and is sitting on a cash pile of RM735 million as well as RM380 million in short-term securities that can be easily liquidated. Effectively, almost half of Bintulu Port’s market capitalisation of RM2.3 billion is represented by the cash and short-term securities that the company holds.

Clearly, its share price is underperforming. Why is that the case?

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