Another PKFZ in the making ...

Asia Petroleum Hub, Johor

The Malaysian Insider, here, has quoted a Singapore The Straits Times (TST) report today that a worsening ownership battle for a planned Malaysian bunkering facility on a reclaimed island in Johor (photo) to rival Singapore’s is threatening to derail the project and could hurt CIMB, one of the country’s largest commercial banks.

It appears that the project leader, a little-known private company called KIC Oil and Gas, has so far drawn down nearly half of its RM1.4 billion financing facility from CIMB to fund construction work. But it has failed to resolve problems with another key shareholder of the project, Seaport Terminal, which owns both the Johor ports of Pasir Gudang and Pelabuhan Tanjung Pelepas (PTP). This has prompted CIMB to consider suspending further funding for the construction.

Questions are now being raised over the viability of the project because the government has decided to hold back on its pledge to put in place the necessary infrastructure, valued at roughly RM350 million for roadworks and other utilities, until the shareholder row is resolved.

KIC insists that it is the rightful developer of the planned petroleum hub after it won rights to lease the island in July 2005 from the Ministry of Transport, but Seaport is disputing the award on grounds that the MoT's move to lease the 40ha reclaimed island to KIC violates an earlier privatisation agreement the company had with the government.

TST has also reported that in a bid to resolve the stalemate, the Malaysian government has decided to dictate the shareholding structure for Asia Petroleum Hub (APH), the company which was awarded rights to build and operate the bunkering facility.

Under the plan, KIC was awarded a 40 per cent interest in the project, while Seaport Terminal was given a 35 per cent shareholding. The remaining 25 per cent in APH was split between two other entities. All four parties have yet to sign a shareholders’ agreement but KIC has led construction work for the project with funding from CIMB. Who is behind MoT's decision to award rights to lease the reclaimed island to KIC and why the funding was released before the ownership problems are resolved remains unclear.

Its crystal clear to me, old bean.