Two projects under PPP worth RM248m a flop - audit report
Two Public-Private Partnership (PPP) projects under the support of the facilitation fund, worth RM248 million, failed to materialise, according to the auditor general’s report, series 2 2018 released today.
One project was the Geothermal Power Plant which as of May 2019 remained uncompleted due to the withdrawal of incentive by the Sustainable Energy Development Authority.
The other project was Universiti Perdana which received RM191 million or 89.7% of the funds approved, yet did not get off the ground.
The report also found two projects of which the scope had been changed thus diverting from the original objective despite being completed.
The government allocated RM30 billion to stimulate private investment in strategic priority areas and impact the country's economy.
As of Dec 31, 2018, the government has disbursed RM12.013 billion for PPP to the fund.
On the management aspect, the report found weaknesses in the process of assessment, agreement administration and channelling of funds, exposing the government to bad governance.
The report said RM3.612 billion was disbursed to certain companies, agencies for purposes that ran against the objectives of the facilitation fund.
For example, funds were withdrawn for acquisition of land for the East Coast Rail Link, MultiProduct Pipeline and Trans-Sabah Gas Pipeline projects.
The report also found that funds were improperly utilised for paying off debt commitments to certain companies.
“Aside from that, the facilitation fund guideline allowing the project eligibility criteria to be amended by special approval could expose the government to bad governance practices.
"This is because no technical evaluation papers were prepared during the assessment process by PPP.
"The discussions and technical evaluations during the meetings were not minuted clearly," the report said.
As such, the audit report recommends for PPP to cease disbursing funds progressively as the government would be at risk to bear the cost.
It stated that progressive disbursement of funds was also contrary to the concept of private-public cooperation where financial risks should be borne by private companies.
The report also recommends for PPP to issue warning letters to companies that failed to fulfil agreement conditions and take appropriate action if companies violated the terms of the contract.
“PPP should take firm action against the companies by facilitating the issuance of default notice and terminate the agreement so that funds given could be reclaimed,” the report added.