Price Of PKFZ Land Cost 67 Per Cent More Than Valued Worth, Says PAC 
November 04, 2009 19:48 PM
KUALA LUMPUR, Nov 4 (Bernama) -- The Public Accounts Committee (PAC) on Wednesday reported that the cost of per sq ft of land for the Port Klang Free Zone (PKFZ) project was RM41.76 which was 67 per cent higher than the RM25 fixed by the Valuation and Property Services Department (JPPH).
The report said that if the land had been acquired in accordance to the Land Acquisition Act 1960, the government would have had to spend only RM442.13 million and saved RM645.87 million.
Besides that, the imposition of a 7.5 per cent annual interest rate on delayed payment for the land, before the signing of a sale and purchase agreement by the general manager of Port Klang Authority (PKA) Datin Paduka O.C Phang, had also resulted in a double charge for the government.
This is because when JPPH had fixed the land price at RM25 per sq ft, it had taken into account an interest payment of 7.5 per cent for the delayed payment for up to 15 years.
PAC also found that approval was not received from the government on the interest rate charge.
"This interest rate charge caused PKA to pay a land purchase cost of RM1.088 billion besides additional interest of RM730 million, bringing the total payment to RM1.818 billion," the report said.
Phang and the Secretary General of the Ministry of Transport had failed to heed instructions from the government and the Finance Ministry in acquiring the land for the PKFZ project, it further said.
Apart from that, a directive from the Treasury Secretary General, that the land for the project is acquired by way of the Land Acquisition Act 1960 and financed through allocation for the Transport Ministry and leased back to PKA later on, was also not followed.
PAC also found that Phang's action to sign a sale and purchase agreement including the development of an infrastructure worth RM1.088 billion was against the government's financial regulations as he had not received the approval from the Finance Ministry.
Phang's action was also not in line with the Port Authorities Act 1963 requirement for him to get prior approval from PKA.
It was also imperative for PKA to ensure that the developer of the project, Kuala Dimensi Sendirian Bhd (KDSB) had carried out all the infrastructure works as determined in the sale and purchase agreement before settling the land payments which will end in 2017.
The committee also found that the appointment of KDSB as the developer by PKA was not done in a proper manner as the Transport Ministry Secretary General and General Manager of PKA had failed to follow the instruction of the Finance Ministry on the matter.
KDSB was appointed as the project contractor by PKA via direct negotiations.
In June 2001, the Finance Ministry had ordered that the contract for the project's building works is given out through open tender and the cost of developing the project financed through the issuance of government guaranteed long term bonds.
The sale and purchase agreement signed by KDSB and PKA in November 2002 also had the condition that KDSB is appointed as the development contractor for PKFZ although approval from the Finance Ministry had not been obtained for exemption from the tender process.
According to the report, approval from the Finance Ministry would have been required to carry out due dilligence to ascertain the financial capability and expertise of KDSB to carry out a project involving such a huge sum.
"The failure by Transport Ministry Secretary General and PKA General Manager to follow the instruction of the Finance Ministry and seek approval from the government on the appointment of KDSB as the project developer is an offence and legal action needs to be taken against them," the report said.
-- BERNAMA
|
