KEuro given RM7b highway deal due to sunk ‘expenses,’ says Putrajaya

By Shannon Teoh

March 21, 2012

KUALA LUMPUR, March 21 — The government said today a company known principally for making and selling granular and powder-activated carbon was given a RM7.07 billion highway deal due to its “efforts and expenses” for a similar highway project that was cancelled.

Datuk Seri Najib Razak said in a written reply to a parliamentary question by Bagan MP Lim Guan Eng that West Coast Expressways (WCE) had first signed a concession agreement for a West Coast Highway from Taiping to Banting on May 25, 2007. The firm is a unit of activated carbon maker Kumpulan Europlus (KEuro), 

“The government agreed to give WCE a chance after taking into account its efforts and expenses in relation to implementing the previous project,” Najib wrote in reply to the DAP secretary general.

Lim also told a press conference today there should have been an open tender for the project which “is the longest concession deal in Malaysia.”

“There is a big impact to public. 60 years. It must be with the best terms. Even four generations from now it won’t be finished. By 2073, maybe Barisan Nasional (BN) won’t be around anymore,” the Penang chief minister said.

Public-listed KEuro had said in January it won a 60-year concession to build a newly proposed Banting-Taiping highway, a deal which drew fire from the opposition due to the favourable terms and questions over how another 100km had been tacked on to the earlier 216km project.

KEuro told Bursa Malaysia it also won a RM2.24 billion government soft loan and a three per cent interest subsidy on commercial loans for a period of 22 years, on top of Putrajaya paying RM980 million in land acquisition cost to join Banting in south Selangor a total 316km to Taiping in north Perak.

It said the 224km of the highway will be tolled compared to 92km that will be toll-free.

DAP publicity chief Tony Pua (picture) had pointed out that KEuro’s president and chief executive Tan Sri Chan Ah Chye was also onboard the controversial housing developer Talam Corporation Bhd, and that both companies had fallen into debt in the past.

“Despite that, it has continued to win support from the Najib administration and got a sweetheart deal in order to see through the project,” Pua said, adding that Chan owned a controlling 27.58 per cent in KEuro, with multi-industry giant IJM Corporation Bhd being the second major shareholder at 22.7 per cent.

But Najib pointed out in his reply today that IJM holds the largest interest in WCE and its track record “is proven not just with local but overseas projects.”

Pua had said that KEuro had made only RM15 million in revenue and RM5 million in profit in the first nine months of last year after racking up RM24.1 million in losses on revenue of RM20.5 million in 2010.

KEuro is described as an investment holding company in stock exchange records and its businesses are organised into three divisions, namely manufacturing and trading of industrial products, construction, and leasing, management services and investment holding.