PETALING JAYA: The apparent political instability in the Perak government could cause further delays in the implementation of the RM3bil West Coast Expressway (WCE).
The state government is a shareholder in the concession owner, Konsortium LPB Sdn Bhd, which is in the midst of raising financing for the highway at a time when banks are more cautious than usual in their lending.
It faces a deadline of March 19.
That can be done only if the consortium shareholders put in the equity portion of the investment required.
For a RM3bil job, the consortium will need to have equity of about RM1bil or about 30% of the total project cost.
Bankers would insist this is done before they agree to lend money to the consortium, analysts said.
Konsortium LPB’s shareholders are Kumpulan Europlus Bhd, with a stake of 60%, while the Perak and Selangor governments own 20% each.
That would mean Europlus would have to come up with RM600mil as its share of the equity in Konsortium LPB while the Perak state government would have to contribute RM200mil.
These are onerous sums for Europlus and the Perak government.
The Selangor government, which owns several corporate entities such as Kumpulan Darul Ehsan Bhd (KDEB), is expected to retain its shareholding in the consortium.
If all the shareholders do not put their respective equity contributions into Konsortium LPB and secure bank financing by March 19, the toll concession for the WCE may be re-tendered by the federal government.
It awarded, or will have to re-award, the concession because the WCE is a federal highway and as such, the federal government will pay for land acquisition costs even though that will be implemented by the state governments.
The WCE toll concession was awarded in 2007 when the Selangor and Perak governments were under the Barisan Nasional.
The state governments were captured by Pakatan Rakyat last year.
All parties, however, may want the WCE project to get off the ground as soon as possible as it complements the government’s stimulus programme at a time of serious global economic problems.
If one or two of the consortium parties are unable to contribute their share of capital to Konsortium LPB, one recourse could be to seek the federal government’s agreement to restucture the shareholding to enable another corporation to take part.
An obvious candidate for this is IJM Corp Bhd, which owns 25% of Europlus.
Even so, in the midst of tight lending conditions, only the Selangor portion of the WCE might be constructed – that would reduce the total project cost to about RM2bil, for which financing might be less difficult to secure.
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