PROPOSED DESIGN, BUILD AND OPERATE A INTEGRATED DOCKYARD
FOR SHIP MAINTENANCE, SHIP REPAIR, HEAVY MARINE ENGINEERING AND FABRICATION
WORKS AT GEBENG, KUANTAN PORT, PAHANG DARUL MAKMUR
ZULAZ Engineering Sdn Bhd the company
incorporated in Malaysia (“The Concessioner”) has secured an approval in
principle from the State Government of Pahang to develop a Shipyard on an area
of about 80 acres to be reclaimed from the sea in Sg. Karang, Kuantan Port,
Kuantan, Pahang.
The proposed Shipyard will provide Integrated
ship maintenance, ship repair and marine engineering services, dry docking,
fabrication works and oil bunkering. The project is located near the existing
Kuantan Port in Gebeng, Kuantan in the state of Pahang. Also located near the
site is a naval base for the Royal Malaysian Navy. The Gebeng Industrial
Estate, which is a host to several major industries including petro-chemical
industries.
It has locational advantage as it is sited
nearer to two related economic zones i.e., the offshore oil and gas related
activities off the coast State of Kelantan, Terengganu and Pahang as well as the
Thailand/Malaysia border (“ECOA”) where a lot of offshore support vessels
(“OSVs”) are deployed and the Kuantan Port when compared to other providers,
particularly those located 24 hours away in Johor/Singapore/Batam, and in the
west coast states that take 4 days to arrived. The Project’s business is largely driven by
merchant Kuantan Port, the offshore oil and gas activities. In Malaysia, there
are two distinct areas where such activities are carried out, i.e., the East
Coast Offshore Area (“ECOA”) and the Sabah/Sarawak Offshore Area (“SSOA”). The
main player in ECOA is oil and gas Company such as PETRONAS, SHELL, EXXONMOBIL,
and its production sharing contractors.
PETRONAS has already announced development
plan involving upstream activities of about RM183 Billion in the next five (5)
years which will drive the demand for OSVs and consequently demand for repair,
marine engineering and rigs fabrication. Apart from that, the Petrochemical
Integrated Development (RAPID) project in Pengerang, Johor, RAPID by PETRONAS
with development cost up to RM60 billion will boost up the ship activities and
RAPID’s proposed refinery will have a capacity of 300,000 barrels per standard
day and will supply feedstock for RAPID’s petrochemical complex as well as
produce gasoline and diesel that meet European specifications. The RAPID
project aims to capitalise on the growing need for specialty chemicals and to
meet the demand for petroleum and commodity petrochemical products in the Asia
Pacific region by 2016. The government initiative under the enhance oil
recovery program on marginal oil field will also see new capital expenditure
that will drive the ship repair and marine engineering sector, other
initiatives that will contribute positively to the Project will be the initiative
under the Ship Building and Ship Repair 2020 (“SBSR 2020”) that aims to capture
higher percentage of ship building and ship repair business in the region by
Malaysian service providers.
Another driver that will contribute to the
Project’s potential is the activities relating to the Port of Kuantan. This
port has shown impressive growth in terms of numbers of vessel port call since
it began operation in 1984. Its contribution to the Project will be further
felt with future plans to expand the port into a mega port that expected to be
completed in 2016, encompassing 12,667 hectares, the completed project will see
a throughput of 24 million tonnes, create 44,785 jobs, with new port
facilities, it will enable the port to receive vessels above 40,000 tonnes or
the next generation of container ships.
South East Asian region is reported to host
about 400 anchor handling tugs (“AHTs”) and platform support vessels (“PSVs”)
and about 800 in other types of vessels. Offshore Support Vessel Owners
Association of Malaysia (“OSV Malaysia”) which has a total 1200 vessel trough
out the region and 480 vessels in east coast. As for Kuantan Port, the number
of vessels port calls reached 2440 in 2011 made up of coastal services and
international services, by the time mega port is ready number of vessels calls
to Kuantan port will be increase.
The needs for ship repair and maintenance
services arise from both regulatory and unscheduled non-regulatory requirement.
Regulatory-wise, vessels/ships are required to undergo mandatory inspection
once every 2.5 years and every 5 years for sea-worthy certification. On average
it takes five (5) days for each vessel below 20000 dwt to docking on and to
complete the first type of mandatory inspection.
The second type of inspection requires the
use of dry dock are vessel below 250000 dwt to docking on and to takes longer
time (10 days) to complete. Similar to scheduled maintenance for a vehicle,
vessels/ships are sent for inspection after 15,000 hours of engine running
which calculates to about 2.8 years under an average engine running of 18 hours
a day. This almost equates to the mandatory inspection once in every 2.5 years. Apart from the above compliance requirement,
vessels/ships are sent to shipyards for repair works for emergency reasons such
as damages due to collisions. These are unscheduled repairs. Other than that,
repair and maintenance works can be done while they are a float in-situ thus
avoiding costly docking charges and charter downtime.
Initially, the cost of the Project excluding
provision and interest during construction (“IDC”) was estimated at RM975
million. With provision of RM48.9 million and IDC of RM125.5 million, the total
cost of the project reached RM1.150 billion. The project IRR based on the financial
projection by ZESB is at 30% with a payback period of about 3.67 years. In terms of implementation arrangement, ZESB
has incorporate a special purpose vehicle (“SPV”), known as Kuantan Shipyard
Engineering Sdn Bhd (“KSE”), as operator of the shipyard to be owned 90% by
ZESB and 10% Perbadanan Setiausaha Kerajaan Negeri Pahang (“PSK”).
