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Subic Bay Metropolitan Authority (MPD-SBMA)

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13 December 2008

SBMA prefers shipping lines to operate NCT-2

SHIPPING lines are the players preferred in the privatization of the second container terminal in Subic as cargo volume would be an issue that needs to be addressed at the earliest possible time, according to the Subic Bay Metropolitan Authority (SBMA).

SBMA Administrator Armand Arreza said his office is looking for a shipping line that would make Subic’s New Container Terminal 2 (NCT-2) its operations hub than award it to International Container Terminal Services Inc. (ICTSI), for example, a company that already operates the first terminal.

Arreza said a shipping line could guarantee to a large extent volume through the port it has cargo vessels, unlike a port operator that could only market the facilities to shipping firms.

“We hope that big liners participate and make NCT-2 its Southeast Asian hub where they will consolidate cargo rather than go elsewhere like Hong Kong, which is so expensive,” Arreza said.

He added, however, the SBMA would not prevent ICTSI from joining the bidding for NCT-2. ICTSI subsidiary Subic Bay International Terminal Corp. won the management and operations contract for NCT-1.

The facility could handle up to 350,000 TEUs (twenty-foot equivalent units) of cargo per year.

Even if ICTSI should win and monopolize Subic’s container terminals, the company still needs to create volume to recoup the expenses it would incur in operating and managing the new container terminal.

The Razon-controlled firm pays SBMA about P100 million a year to manage and operate NCT-1. Should ICTSI win in the NCT-2 bidding, it would have to pay P200 million a year, Arreza said.

NCT-2 is being eyed as a transshipment hub for shipping lines and has a handling capacity of 300,000 TEUs a year expandable to 600,000 TEUs. It has a potential revenue of about $6 million a year, including wharfage fees.

The management and operations contract for NCT-2 is 25 years, renewable for another 25 years.The government has invested $80 million for NCT-2 in the form of a loan from the Japan Bank for International Cooperation. (VG Cabuag, Business Mirror)

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