The government had to bailout two private LRT systems, which had run into financial difficulties, at a cost of over RM8 billion in 2002. The heavy debt burden has resulted in government-owned Prasarana now struggling to repay its bonds.
The takeover of the Star LRT system cost RM3 billion, according to a national financial accounting committee report. Star was owned by EPF, Lembaga Tabung Haji, LTAT, KWAP and private firms such as KLTG Assets, AIA Co Ltd, STLR Sdn Bhd, Apfin Investment, Trustees of Shell Malaysia Retirement Fund and Trustees of Shell Sarawak and Sabah Retirement Benefit Fund. The takeover of the Putra system cost RM5.2 billion.
The National Audit Department confirmed that government-owned Prasarana’s takeover of the two LRT systems cost RM8.2 billion, resulting in Prasarana incurring a debt of RM10.5 billion. “This is a heavy burden for Prasarana,” the accounting committee report noted.
The Mahathir administration had originally privatised the systems instead of running a single publicly-owned integrated system that should have included a bus feeder network and a common ticketing system.
Since its formation, Prasarana had to issue bonds, guaranteed by the government, totalling RM8.5 million to finance the LRT and bus systems. But it was unable to repay the first and second tranches of the bonds totalling 1.4 billion (principal and coupons) that matured in 2006 and 2008. The bonds were subsequently redeemed in full by a government financial allocation.
The report noted: “Prasarana has to be committed in its efforts to assist the government in redeeming the bonds. The Finance Ministry must carefully monitor the financial management of Prasarana to ensure it is carried out efficiently so that the firm’s cashflow can improve to ease the government’s burden in repaying the Prasarana bonds…”
The National Audit Deparment has confirmed that RM9.1 billion worth of bonds (principal) are due to mature between 2011 and 2029, added the report.
As of July 2010, the committee noted it had not yet received a satisfactory explanation on Prasarana’s plans to strengthen its cashflow. “By right, Prasarana should have more efficient management to produce the required cashflow.”
12/10/10
The takeover of the Star LRT system cost RM3 billion, according to a national financial accounting committee report. Star was owned by EPF, Lembaga Tabung Haji, LTAT, KWAP and private firms such as KLTG Assets, AIA Co Ltd, STLR Sdn Bhd, Apfin Investment, Trustees of Shell Malaysia Retirement Fund and Trustees of Shell Sarawak and Sabah Retirement Benefit Fund. The takeover of the Putra system cost RM5.2 billion.
The National Audit Department confirmed that government-owned Prasarana’s takeover of the two LRT systems cost RM8.2 billion, resulting in Prasarana incurring a debt of RM10.5 billion. “This is a heavy burden for Prasarana,” the accounting committee report noted.
The Mahathir administration had originally privatised the systems instead of running a single publicly-owned integrated system that should have included a bus feeder network and a common ticketing system.
Since its formation, Prasarana had to issue bonds, guaranteed by the government, totalling RM8.5 million to finance the LRT and bus systems. But it was unable to repay the first and second tranches of the bonds totalling 1.4 billion (principal and coupons) that matured in 2006 and 2008. The bonds were subsequently redeemed in full by a government financial allocation.
The report noted: “Prasarana has to be committed in its efforts to assist the government in redeeming the bonds. The Finance Ministry must carefully monitor the financial management of Prasarana to ensure it is carried out efficiently so that the firm’s cashflow can improve to ease the government’s burden in repaying the Prasarana bonds…”
The National Audit Deparment has confirmed that RM9.1 billion worth of bonds (principal) are due to mature between 2011 and 2029, added the report.
As of July 2010, the committee noted it had not yet received a satisfactory explanation on Prasarana’s plans to strengthen its cashflow. “By right, Prasarana should have more efficient management to produce the required cashflow.”
12/10/10
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