KUALA LUMPUR, Feb 2 — A CIMB-led consortium has agreed to take over a multi-billion ringgit oil terminal project in Johor following years of shareholding disputes which hobbled the bunkering facility from the get-go.
Bankers involved in the restructuring of Asia Petroleum Hub (APH), the private company awarded rights to develop the terminal, told Singapore’s Straits Times that shareholding issues have been resolved and CIMB has committed to fund the project to completion.
They told the daily the project was about two-thirds complete and that the new consortium hopes to finish it within 18 months.
“Taking over a project for a bank is a little out of the box, but this is a very viable business and there is no reason why CIMB shouldn’t own it as a major investment,” a banker involved in the deal was quoted as saying.
CIMB, which has lent over RM800 million so far, appointed accounting firm PricewaterhouseCoopers as receivers and managers of the project three weeks ago.
As part of the settlement hammered out in recent days, the current shareholders have agreed to surrender their equity holdings, although it is not clear if they have received financial compensation.
The CIMB-led consortium emerged as the only group willing to take over after receivers and managers sounded out potential suitors, bankers involved said.
APH secured a RM1.4 billion financing facility from CIMB in 2006 to build what was touted then as the world’s largest fully-integrated bunkering terminal on a 40-hectare reclaimed island off Johor, northwest of Singapore.
The terminal, which boasts a storage capacity of 924,000 cubic metres and a large trans-shipment facility with multiple jetties, received much attention because of its potential to rival Singapore.
Malaysia has long contended that the country desperately needs to upgrade its oil terminal storage facilities to meet current needs and to cut reliance on its southern neighbour.
They argued that apart from reducing foreign exchange outflows, a large bunker terminal would find ready customers in companies such as Petronas — which now use Singapore’s facilities — and regional oil players such as Thailand’s state-owned PTT.
APH, however, quickly stumbled because of shareholder problems between its chief promoter KIC Oil & Gas and Syed Mokhtar Al-Bukhary’s Seaport Terminal, which owns two of Johor’s main ports including Tanjung Pelepas.
KIC has long maintained it is the rightful developer of the project because it secured the rights to lease the island from the Transport Ministry, but Seaport Terminal has claimed that the ministry’s move violated an earlier privatisation agreement it had with the government.
CIMB went ahead to fund the project led by KIC but the latter’s troubles deepened when the 2008 financial crisis prompted Putrajaya to shelve infrastructure works such as roads, water supply and power lines valued at about RM350 million.
The delays and shareholder troubles led to cost overruns, and in 2010 CIMB issued an ultimatum to KIC that unless the problems were sorted out, it would stop funding the project.
