Takeover of Sapura Energy is long overdue, says expert

 

A takeover of Sapura Energy is necessary because majority shareholder Permodalan Nasional Bhd lacks experience in the oil and gas sector, says Barjoyai Bardai.

PETALING JAYA: Ailing oil and gas services company Sapura Energy Bhd should be merged with or acquired by another company, according to an expert on financial services.

The expert, who asked to remain anonymous because of the politics involved, said Malaysia’s oil and gas sector was oversaturated and a merger or acquisition of Sapura Energy would be long overdue.

The market – not the government – should set the price and decide who will take over the company, the expert said, disagreeing with a suggestion by former prime minister Najib Razak that Sapura Energy should be given easy-interest loans or loan guarantees to solve its cash flow problems.

“A ‘too big to fail’ kind of thing doesn’t work,” the expert said. “The companies will always rely on the government if there are bailouts.”

Berjoyai Bardai.

However, Barjoyai Bardai, an economist at Universiti Tun Abdul Razak, said the government’s investment arm Khazanah Nasional Bhd would be the best candidate to take over Sapura Energy.

He said a takeover was necessary because the majority shareholder, government-owned unit trust manager Permodalan Nasional Bhd, had “clearly shown it lacks experience investing in the oil and gas sector”.

Barjoyai said Sapura Energy must be protected from bankruptcy as it had acquired much new technology and had international contracts and operations in over 20 countries.

Sapura Energy announced a loss of RM8.9 billion last year, described by Najib as the largest in history for any Malaysian government-linked company (GLC).

Najib had proposed that the government direct Petronas or Khazanah to take over Sapura Energy. He said Petronas still required Sapura’s services for its projects and had a better understanding of the sector.

However, Barjoyai said Khazanah was a better candidate as Petronas was likely to view Sapura Energy as a liability in future.

In a recent stock exchange filing, Sapura Energy said revenue had declined to RM4.13 billion from RM5.35 billion, leading to cash flow problems and issues in managing its expansive operations.

In addition, three subsidiaries were served with winding-up petitions earlier this month over non-payment of outstanding contract sums. - FMT