Sunday, June 17, 2012

Sale of Maju Expressway Scuppered?

No nod for Maju Expressway sale, Putrajaya tells Parliament
By Shannon Teoh June 14, 2012

KUALA LUMPUR, June 14 — The controversial RM1.7 billion sale of the Maju Expressway (MEX) appears to be scuppered for now after the federal government said it had not approved the sale of the concession held by Maju Holdings.

The Prime Minister’s Department said in a written reply to a parliamentary question by Petaling Jaya Utara MP Tony Pua (picture) yesterday that no permission has been given for the deal due to “several policy matters related to this highway concession that must be studied by the government.”

“The government has never given permission in relation to the proposal for the sale of the KL-Putrajaya Highway to EP Manufacturing Berhad (EPMB),” it said.

Maju Holdings had hoped to walk away with RM668 million in profit.
[Tony: It's RM1.09 billion in profit!]
But the DAP publicity chief told The Malaysian Insider that “while it appears the deal is off, the answer only says it has not but does not say it will not give approval.”

EPMB had in March entered into an acquisition agreement with Maju Holdings to acquire MEX for RM1.15 billion and also assume debts totalling RM550 million, valuing the deal at a total cost of RM1.7 billion.

This would allow Maju Holdings, controlled by Tan Sri Abu Sahid Mohamed, to walk away with a “whopping” return of RM668 million, taking into account that the construction cost of RM1.3 billion was offset by a huge government grant of RM976 million.

MEX is 96.8 per cent owned by Maju Holdings, in which Abu Sahid controls a 91 per cent stake.

The opposition had promised the same month to buy back the MEX concession if it took over federal power after a coming general election and later called the deal a “rape” of taxpayers perpetrated by Tun Dr Mahathir Mohamad while he was still prime minister.

Pua had said the concession agreement was awarded “on a silver platter” to Abu Sahid in 1997 and revised in 2003 just prior to Dr Mahathir’s retirement.

“The rape of Malaysian taxpayers which made a billionaire out of Abu Sahid... is simply outrageous and unacceptable because out of his ‘profit’, RM976.7 million was paid for by Malaysian taxpayers,” he said, referring to the grant which was worth 74 per cent of the RM1.32 billion construction cost.

Pua said it was the former Umno president who made the decision to offer the RM976.7 million grant instead of a loan, allowing Abu Sahid to cash out quickly.


Anonymous said...

If the goal of the exercise was affirmative action for the Malay race it might be a noble cause but the Maju highway was subcontracted to Leightons Australia.

How are financial sweetheart deals like this supposed to economically evolve the Malay race? It was built by foreigners.

LokGP said...

The government should purchase back the MEX highway, and then resell it back to a new concessionaire.

The returns are only about 3% if the government operate the concession themselves. The 1.5 billion can be made into a better use.

If the government do it for free, then there was a misallocation of 1.5 billion in capital. They could be re-located to the IT sector instead as venture funds to help aspiring IT companies.