KUALA LUMPUR: MMC Corp Bhd expects its overseas operations to contribute significantly to group profit but for the immediate future, the company is looking at its homegrown utilities and port businesses to drive growth.
“Right now, our overseas contribution is not significant because many of the projects we have gotten into have not come to fruition,'' chief executive officer Feizal Ali said after the group's AGM yesterday.
MMC Corp expects its overseas projects to start delivering as it begins to develop the mammoth Jazan Economic City in Saudi Arabia and various overseas ventures undertaken by subsidiary Malakoff Bhd.
Feizal said the major expenses for Jazan Economic City would start next year as the group was now assessing and studying the development.
“Since the launch of the project in November, we have been doing a lot of detailed studies,'' he said, adding that an environmental impact assessment report had been completed while a site survey and board feasibility study were ongoing.
“The power plant negotiations are also proceeding and going well. I am hopeful things will proceed at a smooth pace going forward,'' Feizal said.
The total cost of the Jazan Economic City is estimated at US$30bil, based on all the industries that might set up operations there.
He estimated the total cost of developing the joint-venture project with the Saudi Binladin Group at between US$16bil and US$17bil over a period of 25 to 30 years. MMC Corp, he said, was studying the financing options.
Apart from an initial public offering, Feizal said that MMC Corp could, as a master developer, raise the funds via equity placements at the joint-venture level but no decision had been made yet.
Under Malakoff, there are several big overseas projects pending such as the RM9bil Shuaibah independent water and power project in Saudi Arabia and a water desalination project in Algeria. The company is also part of a consortium that acquired a stake in the Dhofar Power Co in Oman.
As for the major growth drivers in Malaysia, Feizal said that would be the 329km double-tracking project from Ipoh to Padang Besar, although MMC Corp had not received official notification to proceed with the project.
”This is a large private financing initiative (PFI) and the Government has to be careful in the evaluation as well,'' he said. “We are having continuing discussions with KTM Bhd. All parties are moving towards launching the project.''
Feizal said the cost of the project had risen as the price of materials had become more expensive.
“This is exactly what we are discussing with the Government now; to fix the capital costs then work out the PFI structure,'' he said.
On the rationalisation of MMC's Port of Tanjung Pelepas and Johor Port, he said the matter was being discussed and the board had yet to reach a decision.
On the increase in MMC Corp's cashflow after the acquisition of Malakoff, Feizal said as total borrowings had also risen, the cash generated by Malakoff would be used to retire its debts.
And on the sale of non-core assets, Feizal said MMC Corp still had some 35 million shares in Sime Darby Bhd. “The price is good now and we should be looking at a disposal,'' he added.