ICTSI will no longer renew Brunei contract

INTERNATIONAL Container Terminal Services, Inc. on Tuesday said it is “no longer interested” in renewing the contract to operate and maintain the Muara Container Terminal (MCT) in Brunei, which expires next week.

New Muara Container Terminal Services, SDN (NMCTS) — a wholly owned subsidiary of the listed port operator owned by tycoon Enrique K. Razon, Jr. — has been extending its original service agreement on an annual basis for the last four years, ICTSI told the Philippine Stock Exchange on Tuesday.

“NMCTS’s Services Agreement with the Port Department to operate and maintain the Muara Container Terminal will no longer be renewed and will end effective Feb. 21, 2017,” the regulatory filing read.

In an earlier interview, ICTSI Senior Vice-President for Asia Pacific Christian R. Gonzalez said the company has very little exposure to the Muara Container Terminal since it only has a “management contract” with the sultanate’s leading trading gateway.

“Our Muara [operation], it expired already… We’re on a rolling renewal now, but I mean its a management contract so I’m not so concerned about it. If they don’t want to renew us anymore, okay (it’s just okay),” Mr. Gonzalez had said.

In May 2009, ICTSI signed a service agreement and a hand-over agreement with the Sultanate of Brunei Darussalam for the operation and maintenance of the MCT in Brunei. The contract period was for four years, with a provision for a maximum two-year extension.

“The contract expired… but we only have a management contract, not concession. We wanted to propose a concession, they wanted to go a different way and then the Chinese firm has a lot more to offer not just in terms of port [operations],” Mr. Gonzalez added.

As part of the Brunei Government’s ongoing overall restructuring, ICTSI said the state-owned enterprise Darusalam Assets Sdn Bhd will take over the Muara Port operations from the Port Department effective Feb. 21.

“The future plans for Muara Port contemplate its integration with the development of a Special Economic Zone, which is not ICTSI’s core competency and will require huge investments on the part of NMCTS. As part of ICTSI parent company’s efforts at rationalizing its portfolio to achieve the best possible sources of long term growth and return for its shareholders, ICTSI, through NMCTS, is no longer interested in signing a new contract with the State Owned Enterprise Darusalam Assets Sdn Bhd,” ICTSI said.

The MCT facilities include a 250-meter quay and occupy a total land area of five hectares, and have a capacity of 250,000 twenty-foot equivalent units.

Shares in ICTSI dropped 2.55% or P1.95 to close at P74.40 apiece on Tuesday. —