The Port Klang Free Zone (PKFZ) saga continues even with the PwC report on PKFZ made available May 28. Previously the pressure was on the release of the report.

And now that it was made public, the focus shifts. The report was released without the appendix. The appendixes can only be viewed at the PKA office during its office hours.

Edge Links takes this opportunity to provide excerpts from articles written in The Edge Financial Daily on May 29.

The public has been pondering the following pertinent questions.

"What is the true cost for the project?"

“Should PKA fail to meet the MoF soft loan installments as scheduled and if these installments are deferred to match its projected cash flow, it would incur additional cost of approximately RM5 billion. This would further increase the outlay of the project to RM12.452 billion,” the report stated. Project outlay for PKFZ could increase from RM7.5b to RM12.5b

Where are the other issues?

Criticisms were made in the report, including:

"The audit firm criticises the PKFZ (project management) on four counts:
•     Firstly, a RM1 billion development contract was awarded to Kuala Dimensi Sdn Bhd (KDSB) before a project masterplan was finalised.

•     Secondly, PwC says, the PKA may not have received value for money due to its heavy reliance on KDSB as the turnkey developer.

•     Thirdly, project management and control over the project was weak.

•     Fourthly, only the light industrial units had been issued with certificates of fitness at the end of December 2008. The defect liability period had expired and certain defects remain to be rectified."

‘Poor management added to costs’

"Further, the management went against the recommendations of the finance ministry (MoF) on certain matters. These were among the findings of the PricewaterhouseCoopers (PwC) report on the project." PKA board exercised limited oversight

"According to the PricewaterhouseCoopers (PwC) report, compulsory acquisition as recommended by the Attorney-General and MoF, had it been possible, would have cost a total of RM442 million compared to the purchase price of RM1.088 billion (RM25 per sq ft or psf, including infrastructure work with land fully reclaimed) on the basis of 10-year deferred payment." S’gor objected to compulsory acquisition

What is being done?

"He (Datuk Seri Ong Tee Keat) said PKA should improve and tighten governance at its management and board levels, and must beef up the day-to-day management of PKFZ to strengthen operations and improve financial returns.

“I have also directed the chairman of PKA Datuk Lee Hwa Beng to submit a copy of the report to the Malaysian Anti-Corruption Commission (MACC) and the Public Accounts Committee (PAC),” he said, adding that the transport ministry was not only committed to release the report but determined to ensure it seeks all possible remedies within its jurisdiction." We need to seriously act on the findings, says Ong

What does the future hold for PKFZ?

“Shareholders’ funds turned negative in FYE 2007 (RM300,000). PKFZSB has been in net current liabilities position since its first financial period, FPE 2006. Therefore, without continuing support from PKA, PKFZSB would be insolvent.” PwC: PKFZ’s financial viability very uncertain 

Past articles on the PKFZ saga:

May 21:  PKFZ report now with ministers

             PKA chairman no longer has power to release PKFZ report

May 20:  PKA GM resigns

May 14:  PKA board to decide on disclosure of report

             PKA seeks legal opinion on PKFZ report 

May 8:  Onus on PKA when to release PKFZ report, says Ong

May 7: A little longer to wait for PKFZ report 

May 6:  PKFZ bill tops RM10 billion

May 5: No news yet on PKFZ report