Business

Friday May 29, 2009

Three main areas for PKA board’s immediate focus


PRICEWATERHOUSECOOPERS Advisory Services Sdn Bhd (PwC) has stressed three main areas of immediate focus for the board of Port Klang Authority (PKA) going forward.

According to PwC’s report Position Review of Port Klang Free Zone (PKFZ) Project and Port Klang Free Zone Sdn Bhd dated Feb 3, the board must look at governance and project management, financing structure and making the PKFZ viable.

Under governance and project management, PwC said PKA should strengthen its board oversight and governance over significant projects of such nature.

In addition, PKA should take immediate steps to address issues arising from the land purchase and the development agreements with Kuala Dimensi Sdn Bhd (KDSB).

The issues include the non deduction for value of infrastructure works not done and other potential adjustments and the potential interest overcharge of between RM51mil to RM309mil related to the land purchase.

PKA must also adjust the final account of the supplemental agreement signed between PKA and KDSB dated March 27, 2004 for value of work (and associated interest charge) not carried out on three infrastructure components stated in the land purchase agreement. These charges were included in the land purchase price. PwC said PKA must also address the delay in issuance of certificate of fitness and outstanding defect rectification works.

“PKA should ensure that outstanding construction works are completed to its expectations and that the final accounts are reflective of work done,” it said.

On the financing structure, PwC said PKA must restructure the Finance Ministry’s soft loan to avoid a potential default in 2012.

“Some of the restructuring options it may consider could involve a combination of loan rescheduling, Government grant and privatisation,” it added.

PwC said the Government would need concerted effort involving a number of agencies to turn the PKFZ into a financially viable venture.

“The projects’s actual occupancy of 14% is low and not generating sufficient revenue to cover its operating expenses.

“The project faces many commercial challenges to achieving viability including marketing, current economic climate, domestic and regional competition and a multi-agency approval environment,” it added.

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