Hornbill Unleashed

May 5, 2017

Bandar Malaysia dispute: 1MDB crisis will relapse, says Rafizi

Filed under: Politics — Hornbill Unleashed @ 8:01 AM

rafizi-1mdb-1The 1MDB crisis looks set to haunt Prime Minister Najib Razak following the lapse in his pet project Bandar Malaysia’s share sale agreement (SSA), a deal which the government claimed was needed to restructure the state firm’s debts.

The Pandan MP said the dispute between IWH CREC Sdn Bhd, a joint venture between Iskandar Waterfront Holdings and China Railway Engineering Corp, and the finance ministry-owned TRX City Sdn Bhd, has brought into question claims that the troubled state firm had succeeded in restructuring its debts.

“It confirms that Najib’s administration still has no solution to the 1MDB crisis and its debts, that the public are now burdened with,” the PKR vice-president said at a press conference today.

Yesterday, TRX City said the SSA for the sale of 60% of the issued and paid-up capital of Bandar Malaysia, a grand development project in the heart of Kuala Lumpur, had lapsed due to the “failure of the purchasing parties to fulfil payment obligations”.

Following this, the firm said it would immediately invite parties interested to become the main developer of the project, while preserving full ownership with the Ministry of Finance.

Rafizi said the government had previously defended the sale of the 60% stake in Bandar Malaysia to IWH CREC as part of the plan to restructure 1MDB’s debts.

“However, as the sale agreement is now void, it means the debts that 1MDB subsidiary Bandar Malaysia and 1MDB have to shoulder will remain unresolved.”

Rafizi said the latest development also brought into question Najib’s supposedly close ties with China.

“I believe this is a sign that the relationship between Najib’s administration and the government of China is not as good as what was portrayed.

“And if there are massive differences in the sale and purchase of Bandar Malaysia’s shares, to the point that it caused an open dispute between the Chinese company and the Malaysian government, it may affect other big projects,” he said, and cited the RM55 billion East Coast Railway Link to be financed by a Chinese state-owned company.

Bandar Malaysia is the Najib administration’s biggest project to date, which among others will also house a major station in the Kuala Lumpur-Singapore high-speed rail system.

Source : Nawar Firdaws @ FMT Online



1 Comment »

  1. The entire 1MDB “rationalisation exercise” announced as “completed” by the prime minister on 2016 New Year’s Day, has been completely unravelled with the latest announcement that the RM7.41 billion sale of 60 percent equity interest in Bandar Malaysia has collapsed.

    The government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.

    The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets. Edra Energy had acquired the power plants for a total of RM12.1 billion. In addition, the government had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.

    However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion. The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions, which amounted to more than RM3 billion over the period.

    Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds, which were raised for the power plant acquisition in 2012.

    As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Finance Ministry (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.

    This had come as a complete shock to Malaysians as 1MDB and the finance ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.

    Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants. The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.

    Comment by Hattan — May 5, 2017 @ 2:23 PM | Reply

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