PKA seeks hair cut on PKFZ loan

ARCHIVES 2012

By admin-s On Nov 23, 2012

PKA chairman Datuk Teh Kim Poo

(fz.com) – “We borrowed money from the government but the government still owns that property. The 1,000-acre land and all the properties belong to the government, so the government doesn’t lose out”

The Port Klang Authority (PKA) has approached the government with proposals to restructure its RM4.63 billion

Treasury loan incurred to develop the Port Klang Free Zone (PKFZ).

This comes as part of a move by the port authority to alleviate its debt obligations and ensure that it is able to meet the repayments in the long term.

PKA chairman Datuk Teh Kim Poo told fz.com that PKA has proposed to only repay the RM2.76 billion portion of the RM4.63 billion loan that has gone toward development expenses for PKFZ.

Teh argues that PKA should not have to pay for the cost of acquiring the land and assets as these assets ultimately belong to the government.

“We borrowed money from the government but the government still owns that property. The 1,000-acre land and all the properties belong to the government, so the government doesn’t lose out,” Teh said in a recent interview.

According to Teh, PKA has submitted a proposal to the Ministry of Finance (MOF) outlining the various repayment options should the government consent to restructuring the 20-year soft loan given to PKA in 2007.

If the government allows the restructuring plan put forward by PKA, Teh estimates that PKA would only have to pay about RM100 million a year over a 30-year period.

“This is a comfortable amount. We can manage it,” said Teh.

The restructuring of PKA’s RM4.63 billion soft loan has been a key recommendation of the earlier position report completed by PricewaterhouseCoopers (PwC) released in May 2009.

The PwC report pointed out that PKA should consider options including a loan rescheduling, government grant or privatisation.

“Should PKA fail to meet the MOF soft loan instalments as scheduled and if these instalments are deferred to match its projected cashflows, it would incur additional interest cost of some RM5 billion. This would further increase the outlay of the project to RM12.45 billion,” PwC had warned.