JBIC finalising loan for RM2b water project


BY YAP LIH HUEY

THE Japan Bank for International Cooperation (JBIC) is in final stages of discussion with the Finance Ministry, the Economic Planning Unit and related state governments for an undisclosed loan amount for the Pahang-Selangor water project. 

Valued at RM2bil, the project would consist of a reservoir to be constructed in central Pahang and a 40km underground pipeline from Sungai Telemung in Pahang to the Klang Valley, JBIC Kuala Lumpur office chief representative Harumi Ao told StarBiz in Kuala Lumpur. 

He estimated the project, which will make up for the expected water shortage for public consumption in 2007, would be opened for public tender by the Public Works Department (JKR), the earliest in the fourth quarter. 

Several construction and engineering companies from the United States, France, Germany and Japan had been eyeing the construction works for the water project, he added. 

He said the project would take five to six years to complete; with seven years the maximum period allowed by the Malaysian government. 

The RM2bil project is part of the US$1.7bil (RM6.46bil) project under Japan's Miyazawa Plan for infrastructure projects. 

Construction of the reservoir and pipeline was supposed to start at the end of 1999 but was delayed due to environmental issues, bureaucratic matters between the Japanese and Malaysian governments and extensive feasibility studies of the project. 

According to Ao, the Malaysian government had expressed concerns about the delay and wanted to speed up the project. 

JBIC was established in 1999 following the merger of the Export-Import Bank of Japan with the Overseas Economic Cooperation Fund with the statutory mandate to undertake, among others, lending and other operations for the promotion of Japanese exports, imports and economic activities overseas. 

Ao said due to the soft Japanese economy, JBIC's loans commitment to Malaysia and other parts of the world had been decreasing over the past few years. 

JBIC offers two types of loans – the International Financial Operations (IFOs) and the Overseas Development Aid (ODA) to the Malaysian government. 

Last year, in Malaysia alone, JBIC's cumulative ODA amounted to 827,429mil Yen with 72 commitments in various sectors: 

·32 commitments for the electric, power and gas industries valued at 427,689 million yen (51.7%); 

·six commitments for financial intermediary loans valued at 64,032 million yen (7.7%);  

·five commitments for the mining and manufacturing sectors valued at 52,377 million yen (6.3%); 

·16 commitments for transportation sector valued at 119,473 million yen (14.4%); 

·10 commitments for social services valued at 154,703 million yen (18.7%); 

·one commitment for the agricultural industry valued at 2,997 million yen (0.4%); and 

·two commitments for the telecommunications sector valued at 6,158 million yen (0.7%). 

According to Ao, historically, JBIC's loans were primarily concentrated in the electric, power and gas industries. He said JBIC would shift its focus to the education, environmental and rural projects for this and next year. 

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