The government is waiting for a complete report on the controversial Port Klang Free Zone (PKFZ) from the Public Works Department (PWD) to finalise proposals for the financial restructuring of PKFZ and its owner, the Port Klang Authority (PKA).
Prime Minister and Finance Minister Datuk Seri Najib Razak, in a written reply to the Dewan Rakyat dated July 13, said the PWD had on March 8 handed over its preliminary report on PKFZ to the special task force studying the mega transshipment hub.
Najib (Pekan-BN) said that the PWD was preparing its “complete evaluation report” for the special task force.
“These reports will be used as the foundation for the financial restructuring of PKA and PKFZ. (It will also) be used by PKA and the government in civil suits related to the PKFZ project,” Najib said in reply to PAS vice-president Datuk Mahfuz Omar (Pokok Sena-PAS).
Najib said the special task force earlier had ordered the PWD to “investigate, inspect, test, evaluate and analyse the financial and technical aspects of the PKFZ development project”.
The prime minister also said that the PWD was also asked to prepare an “expert report” for the civil suits filed by PKA and for any legal action which the government may pursue in relation to the PKFZ project.
PKA had filed several civil suits against PKFZ’s turnkey contractor Kuala Dimensi Sdn Bhd, former PKA general manager Datin Paduka OC Phang and others related to the project. The lawsuits are pending in court.
The PKFZ sparked a public uproar last year following the release of a PricewaterhouseCoopers (PwC) position report which found that PKFZ’s project outlay had ballooned from the initial estimates of RM1.95 billion to RM3.52 billion, excluding interest cost.
The report also said PKFZ’s total project outlay would increase to RM7.45 billion after factoring in interest costs and could hit RM12.5 billion in 2041 if steps were not taken to restructure PKA’s loans.
The PwC report which was released on May 28, 2009 also noted “significant project costs, weak governance and weak project management (that) have severely undermined the viability of the project”.
Initially, PKA was expected to unveil its PKFZ Business Turnaround Plan in November 2009 in its bid to ensure the viability of the multi-billion ringgit PKFZ project.
Last year, the port authority had also announced that it was working on proposals for financial restructuring and a revamp of its business model as well as a 10-year strategic port master plan for PKFZ.
However, there is scant information available on PKA’s plans for its PKFZ development moving forward.
PKA chairman Datuk Lee Hwa Beng told The Edge Financial Daily last year that PKA’s proposed turnaround plan had already been handed to the Cabinet-appointed super task force on the PKFZ.
The super task force, formed in September 2009, is separate from the special task force and two committees set up by the transport ministry in June 2009.
The super task force, led by Chief Secretary to the Government Tan Sri Mohd Sidek Hassan, is examining the PKFZ project for possible misappropriation, abuse of power and the project’s financial feasibility.
This article appeared in The Edge Financial Daily, July 15, 2010.
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