Asia Petroleum Hub likely to be revived, faces challenges in completing terminal

PETALING JAYA: Construction work on the RM1.3bil Asia Petroleum Hub (APH) in Johor, which has been stalled due to the lack of funding, is likely to be revived with the entry of a consortium led by Dubai-based Emirates National Oil Company (ENOC).

But with unresolved issues over control and ownership that have plagued the project, the new parties could face a tough challenge in completing the terminal that was originally scheduled to be ready in 2009.

ENOC and its Malaysian partners signed an agreement last week to acquire CIMB Bank Bhd’s rights to the project that was designed to handle 30 million tonnes of petroleum products and can accommodate up to 3,000 vessels a year.

Asia Petroleum Hub Sdn Bhd was set up in 2005 to undertake the development and operation of an integrated oil terminal facility on a 40.4ha reclaimed island at Tanjung Bin, off the Port of Tanjung Pelepas, Johor.

CIMB is the sole secured lender for APH and in 2011 CIMB was appointed receivers and managers over it.

When CIMB terminated its credit line, it was reported that the APH terminal had to be redesigned due to its location on the reclaimed island which would incur significant cost increase.

There were also issues regarding the land lease agreement of the APH site.

“There is nothing wrong with the development. There is no delay, soil issues or cost overruns. The contractors have done their work accordingly.

“It’s just that APH has no further funds to pay the contractors that have done their job. Because of this, everything had to stop,” a source said.

The land lease has also courted controversy as a couple of parties have seemingly claimed the rights to the Tanjung Bin land, which is located less than 1km from Port of Tanjung Pelepas (PTP).

According to a news report in 2005, the island belongs to the Government through the Johor Port Authority.

The Government had spent RM100mil to reclaim the island and later sub-leased it to Seaport Terminal Sdn Bhd, which would in turn sub-leased it to KIC.

PTP claimed that the APH was in its port concession area and opined that the rights to develop the island as a petroleum hub should come with ownership of the island.

PTP has long staked a claim on the island on the grounds that it was located in its concession area and that the island formed an integral part of the second phase of its expansion.

The shareholding structure of APH complicates the matter even further.

Based on a report in 2012, APH is wholly owned by AQ Properties Sdn Bhd, which in turn is 90%-owned by KIC Oil & Gas Sdn Bhd and 10% by Trek Perintis Sdn Bhd.

KIC Oil & Gas was controlled equally by Abdul Rashid Mohd Isa and Faizan Hassan.

In 2009, it was reported that PTP would be allocated a 35% stake in APH, while Trek Perintis Sdn Bhd’s stake would be reduced by 5% to 15% and Teori Selatan Sdn Bhd’s would be cut to 10% from 20%. KIC kept its 40% stake. The APH project is in a limbo.

CIMB’s effort to recoup its RM800mil loan by converting debt into equity failed to materialise due to objections by interested parties in 2012.

The contractors of the stalled APH project have yet to receive payment including Muhibbah Engineering Bhd which was involved in the ground piling works.

Muhibbah was awarded an RM820mil project involving marine piling and jetty works in 2007 and had completed jobs amounting to RM370mil before the project stalled. Other contractors included Nam Fatt Corp Bhd and Kencana Petroleum Bhd.

As of Dec 31, 2011, Muhibbah said the company’s entitled receivables, which have been duly certified by APH, were RM399.5mil and the amount of claims pending certification was an additional RM7.5mil.

Muhibbah has made a provision of RM400mil for payment pending work done at the site.

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