KUALA LUMPUR (Dec 22): Benalec Holdings Bhd today said the delay in starting the land reclamation project at 1MY Strategic Oil Terminal Sdn Bhd, in Tanjung Piai, Johor was due to some of the terms and conditions in the agreement have yet to be finalised.

"The project was put on hold based on our client's request," said Benalec's Chief Operating Officer Desmond Boey.

"We were informed by them that they needed some time to iron out some of the terms and conditions for the agreement," he told reporters after the company's Annual General Meeting (AGM).

Boey however declined to reveal further details, saying that he was not at liberty to comment on the client's behalf.

Benalec has further extended the period of validity for the term sheet for the signing of the Tanjung Piai land reclamation deal for an additional duration of six months from Dec 12 2014 until June 11 2015 to finalise the terms and conditions.

To recap, the marine construction services provider announced to Bursa Malaysia that its 70%-owned unit, Spektrum Kukuh Sdn Bhd (SKSB), had entered into a binding term sheet with the State Secretary, Johor and 1MY Strategic Oil Terminal Sdn Bhd “to undertake the reclamation works and sale of approximately 1,000 acres off the coast of Tanjung Piai for the purpose of constructing and operating a crude oil and petroleum storage facility together with a private jetty”.

The 1,000 acres (400ha) of reclaimable land is for an estimated value of RM2.5 billion to RM3 billion.

The Sultan of Johor had earlier citing the project as an example, where the MOU was signed three years ago and witnessed by the prime minister Datuk Seri Najib Razal, has yet to obtain the Environmental Impact Assessment (EIA) approval until now.

The Sultan had further questioned why certain quarters were bent on delaying the approval, and said that such actions only hindered the development of the state and drove away investors.

Commenting on this, Boey expects the result of the EIA report to be released by first quarter of next year (1QCY15).

Boey said the group had in October this year, submitted the report to the Johor's Environmental Authorities for approval.

"The state government is now studying the report. We expect the result would be announced by 1QCY15," he said.

"Once we get the approval, we would be embarking on the land reclaimation project immediately," he said.

"This is a 'big project' for us, and is expected to start contributing to the group earnings by financial year 2016," he added.

Boey said the Tanjung Piai project would contribute to the group’s earnings for a period of 15 years.

Benalec posted a net profit of RM12.03 million in 1QFY15 ended Sept 30, 2014 against a net loss of RM4.66 million in the previous corresponding quarter. Revenue strengthened to RM47.93 million from RM14.4 million last year.

This, according to the group was  due to recognition of land sales in the current quarter.

In comparison, for FY14, Benalec's net profit declined to RM7.21 million from RM56.75 million a year earlier.