BY SHAREN KAUR
KUALA LUMPUR: MMC Corp Bhd, which aims to control Keretapi Tanah Melayu Bhd (KTMB), has presented a proposal to privatise the cargo operations, and initial estimates put the sum at RM2 billion.
People with knowledge of the matter said the proposal was presented to KTMB president Datuk Elias Kadir two weeks ago and he was in favour of it.
They said MMC had received approval to conduct a due diligence, beginning today, on the privatisation.
“MMC has been given two months for the due diligence. If it is viable, a joint venture will be set up with KTMB to privatise the cargo business, with MMC holding the majority share,” said a source.
According to the source, MMC did not indicate how much it would invest in the privatisation exercise.
“MMC would require an initial sum of RM2 billion. It would need to buy up to 20 locomotives for about RM300 million and about 800 wagons worth RM900 million. It would also need to invest in infrastructure and build a yard,” the source said.
“MMC is looking at growing its port operations in Johor. But KTMB has only 60 locomotives, which are not sufficient to support the business. We believe MMC may request for ‘sweeteners’ from the government, which include financial backing, to privatise the cargo operations.”
MMC owns 70 per cent of Port of Tanjung Pelepas (PTP) and wholly-owns Johor Port in Johor.
PTP handles around 7.7 million twenty-foot equivalent units (TEUs) a year, while Johor Port can handle up to 35 million freight weight tonnes (FWTs) a year. Both ports hold a combined 42 per cent share of the port business in Malaysia.
MMC is spending RM1.6 billion to increase the handling capacity at PTP to 10.5 million TEUs a year, starting this year.
It has also allocated RM421 million to increase capacity at Johor Port to 45 million FWTs next year, targeting the oil and gas business.
The loss-making KTMB has been the target of several companies keen to take it private, including MMC and Gamuda Bhd.
Early this year, MMC had been keen to form a joint venture with Gamuda to take over KTMB in a deal worth more than RM5 billion but the plan did not materialise.