KUALA LUMPUR: The report on the Port Klang Free Zone (PKFZ) has finally been made public in its entirety, revealing details on how the transhipment megahub project that was initially estimated at RM1.957 billion ended up costing the Port Klang Authority (PKA) RM4.947 billion, including interest cost due to deferred payments.

The report by PricewaterhouseCoopers (PwC) stated that the total project outlay will cost PKA RM7.453 billion inclusive of interest cost on a soft loan provided by the Ministry of Finance (MoF). PKA has to start repaying the soft loan from next year.

The report, however, stated that the port authority is not expected to have enough cash flow to meet its debt obligations to MoF from 2012 and hence would incur additional finance cost.

According to the report, should PKA fail to meet its debt obligations to MoF, it is expected to be cash flow negative until 2041 and would incur further interest cost of RM5 billion, pushing the total project outlay to RM12.453 billion.

However, the report stated that in any case, the interest of RM2.506 billion and RM5 billion incurred on the MoF loan should not be considered an outflow as it represented a government inter-agency transfer.

The 45-page report that was easy reading for the man in the street, went to the extent of pointing out the various deviations from the norm in the implementation of the project, including:
1.    PKA management did not get input from the board and had weak control over the project;
2.    the cabinet was not alerted to the escalating cost and certain MoF regulations were not complied with;
3.    the advice of the Attorney-General was not sought by PKA when it entered into agreements with the turnkey contractor Kuala Dimensi Sdn Bhd (KDSB);
4.    the RM1 billion development contract was awarded to KDSB before the masterplan was finalised;
5.    the development agreement between PKA and KDSB was not on a “fixed sum” basis and
6.    the project involved numerous companies and personalities that created potential conflict of interest situations.

A month after Transport Minister Datuk Seri Ong Tee Keat ordered the release of the report on the PKFZ project, PKA chairman Datuk Lee Hwa Beng unveiled the report to a packed gallery that included journalists from foreign news agencies.

Opposition members of parliament, headed by Lim Kit Siang, picked up copies of the report and went on to view the 20 appendixes which were not included in the report due to their large size.

The appendixes are available for public viewing for two weeks until June 10, while the report has been put up at www.pka-report.com.

“It is not doctored. It’s the full report. You are not authorised to use or rely on the report to arrive at any conclusion,” said Lee.

He said that PwC was not obliged to respond to any queries while it only owes a duty of care to PKA and not to any other party.

Lee will lodge a report with the Malaysian Anti-Corruption Commission (MACC) today. On whether he was leaving further action to the MACC, Lee said that PKA does not has any investigative power.

Also present at the press conference at the PKA office were PwC managing partner Chin Kwai Fatt and partner Lim San Peen.