Financing model for MRT 3 unsustainable, says PKR MP

16 May 2022 02:15pm

Tanjong Malim MP Chang Lih Kang says debts from MRT 1, 2 and 3 could rise to RM126 billion, urged govt to find new financing ways to curb debts

SHAH ALAM - Tanjong Malim MP Chang Lih Kang has raised concerns over the current debt level of DanaInfra Nasional Berhad and Prasarana Malaysia Berhad, the financing entity and operator for rail projects.

He said to date, Government Loan Guarantees for DanaInfra and Prasarana have breached RM110 billion and are expected to rise further with the MRT 3 project.

Chang also doubts the sustainability of the government financing model in funding MRT 3 project as the performance of MRT 1 could provide a likely projection of the fate of MRT 2 and 3.

The Finance ministry had previously said DanaInfra and Prasarana recorded debts at RM76 billion and RM38.9 billion respectively by June end 2021.

He said these sums up to a total of RM114.9 billion, which is about 60.3% of total off-budget government committed guarantees. In early March, the Ministry of Finance committed up to RM50 billion in financing for the MRT 3 project.

Chang added just like MRT 1 and 2, the RM50 billion bill for MRT 3 is also likely to be financed by a government loan guarantee under DanaInfra, driving up DanaInfra’s debt to breach RM126 billion with the implementation of MRT 3 project. That is approximately 40% of our country’s budget for 2022, he said in a statement.

He said the government committed guarantee for Prasarana has doubled from RM18.7 billion to RM38.9 billion within 5 years, from 2016 to 2021.

"This is due to losses that Prasarana has bled in those years.

"Based on financial report submitted to the Companies Commission of Malaysia (SSM), Prasarana has recorded after-tax losses of RM4.46 billion, RM3.61 billion and RM5.15 billion for 2020, 2019 and 2018 respectively," he added.

For FY2020, retained losses for Prasarana stood at RM46.9 billion, with total assets of RM3.3 billion and total liabilities of RM41.8 billion. Prasarana’s poor financial performance could be attributed to low revenue and operational losses caused by insufficient ridership for rail and bus services that it operates, Chang said.

"If ridership for the MRT 2 and MRT 3 do not work out to be what the government has envisaged, Prasarana would not be able to self-sustain. It could mean the government has to service their loan because it is government-guaranteed loan. The country and the rakyat would be burdened by this imprudent way of spending.

"Auditor General has alerted us in its 2018 report, DanaInfra is one of the five companies that could not fully service loans accordingly.

"The government ended up injecting RM1 billion to DanaInfra to pay part of its debt," he said.

"While we do not expect public transport to be highly profitable, construction and operation of the rail infrastructures must be funded by sustainable means. Therefore, instead of cloning the failed financing model, the government should halt the MRT 3 project immediately and allow Parliamentarians to deliberate through Select Committees," he said.