APH – Another PKFZ?

By Umnocovering Corruption APH stands for Asia Petroleum Hub (APH) and it is located off the coast of Tanjong Bin in Johor. Targeted as the largest private-owned oil storage and blending facility in the world, the government and the major players are quickly turning this project into yet another fiasco. So who owns APH? Umno is supposedly a covert 15% owner (via Trek Perintis). KIC Oil and Gas Sdn Bhd is supposed to be a 40% owner. Seaport Terminal (35%) and Teori Selatan (10%) are supposed to make up the rest of the shareholders.  This was not so at the beginning of the project when KIC together with Trek Perintis (TP) was awarded the project. KIC used to own 90% while TP the other 10%.  Let's investigate the project from the start. Tanjong Bin is the most southernest tip of peninsular Malaysia. Located right across the river from Pelabuhan Tanjung Pelepas (PTP), it nonetheless escaped initial attention and interest owing to its swamp and mangrove covered area and zero accessibility. Its close and vital vicinity to major shipyards like Keppel and Hitachi-Jozen in Singapore however made it quite obvious that this parcel of land will not stay invisible for long. Initially owned by Pedoman Gading Sdn Bhd (which list amongst its shareholders one Tun Ghaffar Baba), it has explored the possibility of turning this area into a major international shipyard (in a joint venture with an unknown privately held company called S2000 Venture Sdn Bhd.) An environmental impact study was conducted to access the viability of this option after obtaining the Johor State Government and Federal Government approvals to develop this land. So far so good.  The initial planning by S2000 was to create a shipbuilding facility and a township (to be called Bandar Sultan Iskandar Shah). This would later be appended by a commercial area, an industrial area and a container storage area over a 7-year development period. Approvals by various government agencies including the DPM's office and the Ministry of Transport were obtained. The US$1.4 billion (RM5 billion) project would include investors from all over the world including Evergreen (Taiwan), Rolls Royce (UK) and Damen Shipyards (Netherlands). Plans were drafted, contractors were summoned to give quotations, funding was obtained, soil samples were tested, project management teams were organized, consultants were appointed, technical experts were being interviewed, the administrative team was formed, etcetera. Final approval was thence being obtained.  The trouble started when the PM's department (final approval) did not endorse this project. The year was 2001. Why? There was no reason given and none would be forthcoming even if asked. After a period of almost a year of attempts to obtain final approval (without success), the investors withdrew their funding. S2000 went bankrupt as the company has invested quite a hefty sum in it. Instead, a small parcel of that land was sold by Pedoman Gading to Tenaga, which built a coal-fired power station there. Now, why would Tenaga do so unless this piece of land was targeted and fast-tracked as a potential "development area"? If so, why was the Pedoman Gading-S2000 Venture's proposal (complete with funding) rejected? The plot thickens.  In 2002, the land was bought over by a MMC (owned by Syed Mokhtar) which proceeded to develop the land. This time the approval was consented with ease. Superfluous land and trash were dumped off the coast and in fact so much of it was dumped at this spot that it became a land filled island. This is the "island" which APH will be built on. 64 various sized petroleum tanks (the largest approximately 75m diameter) including facilities to blend and bunker oil was to be built here. The total capacity of APH will be approximately 1 million cubic meters.  Why was TP awarded the project instead of MMC? According to some sources, this was because Syed Mokhtar was initially not interested in the RM1.4 billion project as its projected earnings were "pittance" and that he would rather concentrate on his pet company (PTP) which was fast becoming a major international container port. If one thinks that this is bizarre, one should look at the ownership of APH. KIC's initial share of 90% (2005) were trimmed to 40% (2009). New shareholders were introduced by the Cabinet including Seaport Terminal and Teori Selatan, each with 20% holdings. Then Trek Perintis's 20% was trimmed to 15% and Teori Selatan's 20% was trimmed to 10%. Seaport Terminal gained the 15% and now holds 35% and all this happened when APH is still being under construction.  So who owns Seaport Terminal and Teori Selatan? The former is owned by Syed Mokhtar and the latter by Tengku Mahkota Johor (Johor's Crown Prince). Why must a private company's (KIC) interest (APH Project) endure being split by the government? Why indeed?  Let's look at the structure of the major players. KIC and TP are the owners-developers. CIMB is the funder. Mott Macdonald is the project consultant. ZAQ Construction is the Lead Contractor. Nam Fatt, Muhibbah and Kencana are the other contractors. QIpmc is the operator (after completion). Note any similarities? KIC is owned by Abdul Rashid Isa (CEO). TP is a proxy of Umno and under the control of party treasurer, Datuk Azim Zabidi (former chairman of Bank Simpanan). Amongst its directors is one Datuk Zulkifly Rafique . Abdul Rashid Isa and Datuk Azim Zabidi are childhood friends. ZAQ is owned by Zainal Rafique. QIpmc is part of ZAQ and shares similar directors, amongst them one Zamani Rafique. In fact they have their offices in the same building in Jalan Ampang.  Of course there is nothing wrong with brothers and friends cooperating on a major RM1.4 billion "private" project but the question remains why Umno is calling the shots if this is indeed a private project. Could there be anything more in it that meets the eye?  Syed Mokhtar's sudden interest in this project is yet another unanswered question. He could have easily gotten it when TDM was PM but why did he wait until AAB was PM that he eventually made his claims? CIMB has threatened foreclosure on KIC as the company has already drawn down almost RM800 million of its RM1.4 billion financing facility without much to show for. If KIC was thrown out of the picture, who will claim the 40% equity KIC owns? Could Syed Mokhtar's close ties with TDM been one of the factors why the bank is planning to withdraw its facilities? (The APH Project was scheduled to be completed this year but hardly half has been finished as unconfirmed rumors have it that Nam Fatt was not performing and was subsequently dismissed as a contractor with Rotary of Singapore being the new contractor.)  KIC of course claimed that the ownership crisis and the subsequent government's intervention plus the caveat by Tunku Ibrahim Ismail (TMJ) have prolonged the project. Additionally, the company said that piling works has started and development is on schedule (in accordance to the new schedule). CIMB's threat of foreclosure might have frightened off any developer but KIC, it seems, is standing firm (with rumors from sources that said that the company has obtained overseas funding from a Middle East prince).  Is this yet another PKFZ in the making? Or is it a case of mere fumbling by all parties involved, each with their own agenda?