financialdaily, 26 jun 2008...Kuala Dimensi to get RM660m from PKA

PORT KLANG: Kuala Dimensi Sdn Bhd, a company associated with Wijaya Baru Global Bhd, will get its first scheduled payment of RM660 million for the construction of Port Klang Free Zone’s (PKFZ) infrastructure and facilities following the verification of work by auditors PricewaterhouseCoopers (PwC).

Of the RM660 million, Port Klang Authority (PKA) will pay Kuala Dimensi RM360 million on June 30 while the balance will be paid in July after finalising the soft loan agreements with the government.

Kuala Dimensi was the turnkey contractor for PKFZ’s infrastructure and facilities which included warehouses, light industrial units, office complexes, a customs complex and a business class hotel.

“The appointment of the auditors was to look at the repayment and the work done. The audit has been completed but we don’t know what was the term of reference used by the auditors. MoF is supposed to forward us the results of the audit done this week,” PKA newly-appointed general manager and chief executive officer Lim Thean Shiang said at a briefing yesterday.

“There is no guarantee by the government. Payment is paid based on ability of PKA and of course, we will fulfil (the loan obligations). To be fair, the contractors have built the entire facilities. A quality surveyor company, which was appointed by the Ministry of Finance (MoF), has also gone through the work done and verified it is worth over RM1 billion. We have yet to pay them (the contractors).”

Lim is also the executive chairman of PKFZ effective June 16, taking over from Datin OC Phang, who remained as a director in the company. According to Lim, Phang resigned as PKFZ director on Monday.

Lim added that MoF would forward the results of the PwC audit to PKA and both parties would sign the first agreement on the soft loan in a couple of days.

However, he said Kuala Dimensi had received its first payment after moratorium period of the project amounting to RM510 million last year. Of this amount, RM250 million came from PKA internal funds and the balance was paid by the government.

The soft loan, which comprises four agreements to be signed with MOF, will settle up to RM4.6 billion worth of the projects, which cover land cost and interest payments. This will be paid over 15 years.

But Lim said PKA was looking at locking in lower interest rate of 2% instead of 4% for the second and subsequent agreements. It was also negotiating for a longer loan tenure of 20 years.

The PKFZ project suffered severe cost overruns that ballooned beyond its original cost of RM1.85 billion and left PKA RM4.6 billion in debts by the time the project was completed in 2006.

Last year, the government agreed to give a soft loan to rescue PKA from its debts, which it partly blamed Dubai’s Jebel Ali Free Trade Zone Authority (Jafza). Jafza pulled out of a management pact with PKFZ in July 2007.

Lim said PKA had proposed the appointment of another audit to be made on the cost and benefits of the whole PKFZ project.

“We have forwarded to MoF the proposed appointment of a consultant to look into the financing, return on investments, and benefits from the entire project,” he added.

On a separate matter, PKA chairman Datuk Lee Hwa Beng said effective Jan 1 next year, the free storage period at the port terminals would be shorten to three days from five days.

Initially, the implementation was supposed to take effect on July 1 but was shelved as the government agencies were still not ready.

Lee said the move to shorten the free storage period would make the ports more efficient and competitive.