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News

Former port chairman laments sale to local shipper

14 July 2010
The ex-chairman of Tongling Port Group, Wu Zhaolai, has told Yangtze Business Services that the sale of his former company to a local conglomerate Tongling Chemical Industry Group may not be the best way forward for the development of the port city. The sale took place in April when the local government gave its approval for the deal to go ahead.

The new owner, itself a major user of the port, has its own commercial interest and Mr Wu said it was unrealistic to expect it to be impartial when it comes to scheduling the loading and unloading activities for all port users. He is concerned that, under new ownership, the port may function more like a private operator with some additional services for third parties than as a normal common-user terminal.

Like many other ports along the Yangtze’s lower reaches, the Anhui port of Tongling is struggling to keep pace with the region’s rapid economic growth. Port development and expansion plans, however, have needed outside investment. For a long time, Tongling port was unable to attract major domestic or international investors. In March the local government decided to sell the entire port group to Tongling Chemical for nearly Rmb200m. The sale was conditional upon: a cash injection of some Rmb500m that will be used over the following two years to expand container capacity and double cargo-handling capacity to 10m tons in line with the government’s plan; and an investment of at least Rmb2bn to build a bonded centre and Henggang Logistics Centre.

Before the deal was formalised, the port group’s least profitable assets were stripped and the workforce cut to 400 – it used to have a total of 1,600 employees and another 1,600 on its books either in retirement or on long-term sick leave. The entire management team was replaced. Mr Wu himself was laid off and given a senior consultancy role in the city’s transport commission, a job typically given to senior government officials before their retirement.
     
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