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Categories
| PKFZ bill tops RM10 billion |
| Business & Market 2009 | |||
| Written by Sharon Tan | |||
| Wednesday, 06 May 2009 10:44 | |||
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The escalating cost is largely due to interest accumulated over the years; the project being largely financed by debt papers underwritten by PKA. According to an MP, the briefing was given by PKA general manager Lim Thean Shiang and was attended by fewer than 20 parliamentarians. “Some of us were shocked at the figures coming out during the briefing. The cost escalated largely due to interest cost accumulated over the years before the project was expected to break even. The assumptions are based on a realistic cash flow that the project could generate,” said the MP. The briefing also touched on other matters such as land that PKA had acquired and legal matters to be ironed out before the report, prepared by PricewaterhouseCoopers (PwC), can be released to the public. PKA embarked on the project in 2003, envisioning it as a transshipment hub complete with a convention centre and a four-star hotel. It acquired 999.5 acres (399.8 hectares) of land from Kuala Dimensi Sdn Bhd, a company owned by Datuk Seri Tiong King Sing, the present chairman of the Barisan Nasional Backbenchers’ Club. PKA paid RM1.09 billion for the land to be settled via deferred payments over 15 years. PKA’s deferred payment was backed by a government guarantee. Kuala Dimensi, armed with the government guarantee, sold bonds worth RM1.31 billion. Subsequently, PKA awarded the job to develop the land into a transshipment hub to Kuala Dimensi, which issued another tranche of papers, backed by a government guarantee, amounting to RM1.4 billion. Two more tranches of bonds with a total face value of more than RM1 billion followed, to finance the construction. Kuala Dimensi is said to be well-connected, having board members such as Datuk Azim Zabidi, who was then Umno treasurer. Tiong is also a major shareholder of Wijaya Baru Global Bhd where the executive director and group deputy CEO is Datuk Faizal Abdullah, the former Selangor Umno Youth leader. Faizal, the son-in-law of Datuk Onn Ismail, another influential figure in Selangor Umno, is now the deputy Umno Kapar division chief. The land acquisition took off when former MCA president Tun Dr Ling Liong Sik was the Transport Minister. The subsequent phases of the project were implemented when Tan Sri Chan Kong Choy helmed the ministry. PKFZ came under public scrutiny due to its escalating cost. Previously, Chan had said the project would not cost more than RM4.6 billion. Amidst the furore, PKA commissioned PwC to conduct an audit. On April 29, Transport Minister Datuk Seri Ong Tee Keat, who is also MCA president, instructed PKA, led by chairman Datuk Lee Hwa Beng, to release the report within a week. The report was ready some four months ago but could not be released due to delay in de-classification of certain documents from another ministry. The PwC report is due to be released today but it is learnt that this is likely to be deferred. According to the MP, it is very likely that PKA will only release the report tomorrow or Friday as there are a few matters concerning indemnity that need to be ironed out first. Two weeks ago, The Edge weekly reported that the cost of the PKFZ project is estimated to have gone up to RM8 billion, taking into account the interest cost. It is learnt that the earlier estimate of RM4.6 billion did not take into account the 4% interest on a soft loan that the government had furnished PKA to redeem its bonds. The MPs were notified of yesterday’s briefing via SMS by the Barisan Nasional Backbenchers’ Club secretariat three days ago. Asked if any other matters were discussed at the meeting which began with lunch, the MP said: “The whole briefing was about PKFZ.” This article appeared in The Edge Financial Daily, May 6, 2009.
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