KUALA LUMPUR (Dec 8): Westports Holdings Bhd has secured a 58-year extension until 2082 to its concession agreement with the government.

The group's wholly-owned subsidiary, Westports Malaysia Sdn Bhd (WMSB) on Friday entered into a third supplemental privatisation agreement with the government and Port Klang Authority (PKA) for the extension of the concession.

Previously, the Westports privatisation agreement between the government, PKA and WMSB was signed for a period of 30 years ending on Aug 31, 2024.

The new concession until 2082 will include the existing port facilities in Westports as well as the new facilities to be developed during the concession period involving an investment of RM39.6 billion, the group said in a statement.

The signing of the third supplemental agreement in Putrajaya, witnessed by Transport Minister Anthony Loke, will facilitate the expansion of container terminals (CT) 10 to 17.

"The expansion of CT10 to CT17 is expected to increase the capacity from 14 million twenty-foot equivalent units (TEUs) to 27 million TEUs based on projections until 2082.

"The development of the CT10 to CT17 container terminal will be carried out on sustainability principles, in line with green and smart port concepts, including the use of automation and digitalization that will not only reduce greenhouse gas emissions but also future-proof the port.

"The new development will provide the necessary port facilities and services to meet future demands to support the nation's economic growth," the group said.

The preliminary works for the proposed expansion will commence as early as January 2024, Westports added in a bourse filing.

The group will incur an initial development capital expenditure of RM12.6 billion for the expansion, the filing said.

"CT10 to CT13 is expected to cost RM6.28 billion, which will be spent from 2024 until 2038, while CT14 to CT17 involves another development expenditure of RM6.28 billion."

Westports said WMSB will transfer the ownership of two parcels of land to PKA, with the total land and related acquisition cost amounting to about RM610 million.

"WMSB will pay PKA a total fixed lease rental of RM91 million per annum effective Sept 1, 2024. There is also a variable lease payment to PKA based on the volume handled by WMSB," the group said.

Westports said the overall total projected capital expenditure of RM39.6 billion over 58 years includes the replacement capital expenditure of the existing CT1 to CT9, the initial development capital expenditure of the expansion and the projected replacement capital expenditure for the expansion.
 
It added that it will fund the development capital expenditure with a combination of internally-generated funds, borrowings, dividend reinvestment and/or private placements.

WMSB, it said, is in the process of establishing a new RM5 billion sukuk programme to finance the expansion.

Shares in Westport last traded at RM3.57 on Friday, prior to a trading suspension at the group's request pending the agreement signing. According to Bloomberg data, the counter has fallen 1.89% year to date.