updated version

The government today reiterated that it would take over Kuala Lumpur's Putra and Star light-rail transit (LRT) systems, financed by a series of bond issues amounting to RM6 billion.

The bonds, said Deputy Finance Minister Shafie Mohd Salleh, will be issued in five stages with a resale value of 58 to 75 percent.

He said that up to March this year the project has incurred losses as much as RM5.5 billion.

Last December, the government announced it would take over the debts of the two LRT companies as part of a major restructuring of Kuala Lumpur's public transport system.

The railway networks would then be leased back to the private firms to operate.

Most debt-ridden conglomerate

Sistem Transit Aliran Ringan (Star) is under UK's Taylor Woodrow plc, Employees Provident Fund and Lembaga Urusan Tabung Haji, while Projek Usahasama Transit Ringan Automatik (Putra) is owned by conglomerate Renong.

On Monday, the government announced that it would take over United Engineers Malaysia (UEM), an associate company of the Renong group, in a bid for its shares amounting to almost RM4 billion.

Renong, the country's most debt-burdened conglomerate, has some RM13 billion in outstanding group debts.

Shafie told Parliament that the ministry was currently studying a transport restructure scheme that will be both financially viable for the government and the people.

"This scheme must not only be able to ease our financial burden but must be beneficial to the rakyat ," he told fellow MPs during the question-and-answer session today.

"We want a system that is holistic, efficient, affordable with the least cost to the government," said the deputy minister, who is also MP for Kuala Langat.

Shafie was responding to PAS MP for Pokok Sena, Mahfuz Omar, who wanted the ministry to state when the government will go ahead with the intention to take over the assets of the Putra and Star.

Mahfuz also queried on the value of the bonds for the intended bailout.

Special task force

However, Shafie did not elaborate when the bailout will take effect.

The deputy minister said that a special task force under the Finance Ministry had already been set up, comprising the Economic Planning Unit and the ministries of Transport and Entrepreneur Development, to study the integrated transport system for Klang Valley commuters.

Meanwhile, Prime Minister Dr Mahathir Mohamad told a press conference in Putrajaya today that the government is still studying the takeover of the LRT companies, adding that the total sum of RM6 billion is still to be confirmed.

"We are still finalising the terms of our acquisition," he said after attending a briefing session by the Malaysian Industry-Government Group for High Technology (Might).

He added that the government will first have to find the money but declined to confirm whether this would be done through the issuance of bonds.

Asked when the takeover is expected to be executed, the premier said, "Soon, I hope."

In recent months the government has come under severe criticisms for bailing out companies owned by entrepreneurs who are said to be closely linked to the ruling party.

Early this year, the government paid RM1.8 billion for a 29.09 percent stake in the debt-ridden Malaysian Airlines System. The RM8 paid for each share was twice as much as the market price but the government insisted that it was a good buy.