APPLICATION FOR CLEARANCE IN PRINCIPLE
MODERN TERMINALS LTD HONG KONG
Scheme :
Sponsors:
Construction and operation of container terminal at Kwai Chung on the mainland north west of Kowloon in the Colony area of Hong Kong.
Modern Terminals Ltd in which the prospective investors include Overseas Containers Ltd, a UK associate of Ocean Steamship Co Ltd, Ben Line Containers Ltd, Butterfield and Swire Ltd, Jardine Matheson, Wheelock Marden and the Hong Kong Shanghai Bank.
Proposals: (1) The efficient and economical provision of a container service
necessitates the operational control of terminal facilities by the container operator. This can best be achieved by their total involvement in the planning, development and construction of the berths and facilities from inception and the follow-through operational control thereafter. Ultimate financial success is more likely to be assured if a substantial proportion of the equitable interest in the container operation is held by the major users of the service. All these elements are present in this project.
(2) The situation in Hong Kong is that the American based Sealand Containers are already operating an improvised container terminal in the Colony. Sealand have in addition tendered for the Kwai Chung Terminal and if successful it would inevitably place UK Shipping Lines providing container services to Hong Kong completely in the hands of foreign terminal operators. Hong Kong trade with UK/Europe is 2.4m tons pa, 1.5m tons is carried by British Lines to Europe, 1.40m tons of which is destined for UK. Inability to obtain priority at the container terminal could materially affect the volume of cargoes carried to and from Hong Kong by UK Shipping Lines.
(3) The Port Works Division of the Hong Kong Government has undertaken an engineering feasibility study for the reclamation of 87 acres of land from the sea and the building up of another 114 acres on the landward side of Kwai Chung. The study provides for the construction of four 1,000 ft lateral wharves equipped to handle container cargoes with a channel dredged to take vessels of 35 ft draught. The first two berths are scheduled to be in operation by 1973. Currently on order from ship yards for the Far East trade are 8 British, 4 German and 5 Japanese container ships.
(4) Overseas Containers Ltd have tendered for the first two berths as a package, as the award of one berth only would be insufficient to provide all the capacity needed by UK shipping interests. The cost is estimated to be £14m including a large procurement of equipment and services from UK. The equity capital is likely to be £5m of which Overseas Containers Ltd and Ben Lines are expected to subscribe 51%. The balance of equity will be subscribed by local interests.
(5) The sponsors have a commitment from the Hong Kong and Shanghai Bank to supply a substantial amount of funds provided the sponsors can raise the balance on acceptable terms. Sponsors are currently investigating the availability of ECGD funds to finance part of the UK procurement element but, in view of the short term nature of ECGD credits, they have approached CDC for financial participation in equity and in loan capital of up to £2.5m on 10-15 year term to ease the cash flow in the early years.
(6) The proposed terminal at Kwai Chung is located close to the industrial area of Kowloon; it will relieve heavy traffic con- gestion between the factories and the traditional loading berths
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