KUALA LUMPUR (Jan 22): Prestariang Bhd said both the group and the government have mutually agreed that the cancellation of the concession for the SKIN project will take effect today, adding that it does not plan to challenge the termination.

Prestariang said its wholly-owned subsidiary Prestariang SKIN Sdn Bhd (PSKIN) is currently in discussions with the government to settle the compensation amicably in accordance with the formula set out in the concession agreement.

It also reiterated that PSKIN is not in default of the concession agreement.

"However, we respect the decision of the government to exercise its rights to terminate the concession by expropriation in accordance with the terms of the concession agreement and PSKIN does not intend to challenge the termination of the concession," it said in a filing with Bursa Malaysia today.

On Dec 12 last year, Prestariang had announced that PSKIN had the day before received a letter from the home affairs ministry confirming the decision of the Cabinet to terminate the SKIN project by way of expropriation.

Prestariang had also warned that the termination of the concession agreement may have a negative impact on the group's 15-month financial period ending March 31, 2019.

The SKIN project is based on the public private partnership model, where PSKIN would finance, build, operate, maintain and ultimately, transfer the system to the government after 15 years.

Under this model, the government was not required to make any payment to PSKIN during the first three years of development execution. PSKIN would undertake the entire funding and execution of the SKIN project.

Charges would only be payable by the government after the SKIN Solution was successfully implemented at all immigration sites in Malaysia and abroad.

Prestariang said the SKIN project would not have burdened the government or citizens as it is a self-funded project, which could have generated new income and created savings to the government, as outlined in PSKIN's business model and proposal.

"The detailed scope of work for the SKIN project was specifically designed in accordance with the requirements of Immigration Department of Malaysia and the home affairs ministry, after undergoing the business process re-engineering exercise spearheaded by the Malaysian Administrative Modernisation and Management Planning Unit with the other government agencies," it added.

Prestariang shares closed down 2.5 sen or 7.35% at 31.5 sen today, with 13.16 million shares done, bringing a market capitalisation of RM152.46 million.