Media statement by Tony Pua Kiam Wee in Kuala Lumpur on Friday, 3rd February 2012:
Public interest has been compromised as a result of the cost of KLIA2 ballooning from RM1.7 billion to RM3.9 billion
Tan Sri Bashir Ahmad, Managing Director of MAHB had on 29th November 2011 denied that public funds will be used to fund the drastic increase in cost of KLIA2, the new "low-cost" airport. He has earlier announced that the cost of the KLIA2 has increased to as much as RM3.9 billion.
The cost of the airport first announced in July 2007 by the Transport Minister then Datuk Seri Ong Tee Keat was RM1.7 billion. The airport was also supposed to be completed by September 2011 but has since been delayed several times to the now April 2013 deadline.
Despite Tan Sri Bashir's denial that public funds will not be used, MAHB has announced to Bursa Malaysia on 30th January that it will raise approximately RM598 million from a proposed share placement exercise. In the info-memo submitted to the stock exchange, MAHB stated that "the gross proceeds to be raised from the Proposed Private Placement will be utilised to part finance the additional capital expenditure to be incurred as a result of the enhancement in specifications for the new low cost carrier at Kuala Lumpur International Airport".
The new equity will be raised via the issuance of 110 million new shares constituting 10% of MAHB share capital.
The action by MAHB to raise additional funds from the market proves that public financial interest has been compromised as a result of the RM2.2 billion increase in cost of KLIA2.
Existing major shareholders of MAHB which act indirectly as trustees to Government and public funds are forced to dilute their shareholding by 10% as a result of the exercise. Khazanah which owns a majority stake of 54.0% in MAHB before this will have its stake reduced to 49.1%. Similarly, the Employee Provident Fund (EPF) and Skim Amanah Saham Bumiputera (ASB) will have their 10.3% and 6.8% stakes slashed to 9.4% and 6.2% respectively.
The MAHB info-memo also stated that "assuming that the net earnings of the MAHB Group for the financial year ended 31 December 2011 remains unchanged, the earnings per share (EPS) of the MAHB Group will be reduced proportionately with the increase in the number of MAHB shares".
The above proposed issuance of new shares to raise funds, is on top of RM3.1 billion in debt MAHB has raised in 2010, of which RM2.5 billion has already been drawn down for the purposes of financing the new KLIA2.
Therefore it is completely ridiculous for Tan Sri Bashir to deny that "public funds will not be used" when it is clear, the Government and public interest in the project held by Khazanah, EPF and ASB have been compromised through a dilution of their stake as well as a reduction in earnings. This has yet to take into account the fact that RM3.1 billion in debt has been incurred as a result of the cost overruns. What is of concern to the public is the fact that MAHB's ability to repay the debt without future bailout by the Government is by no means assured.
We call upon the Ministry of Transport as well as Khazanah, who act as custodians of public funds and interest in MAHB to initiate and inquiry and investigation into the KLIA2 fiasco to ensure that those who have been negligent, intentional or otherwise, are brought to book and prevent future excesses by the guilty culprits.
* Tony Pua Kiam Wee, DAP National Publicity Secretary & MP for Petaling Jaya Utara