KINIBIZ Would you pay rental to yourself to use property that you already own for years – and have already long fully paid for at that?

That is exactly what Putrajaya is doing, having paid some RM5.77 billion in rental over the past two-and-a-half years to use 186 land parcels it already owns. And it will continue to pay another RM23.4 billion in total over the next 12 years or so.

The recipient? Pembinaan PFI Sdn Bhd, an obscure company wholly owned by the Ministry of Finance. “This is a left pocket to right pocket transaction,” said Kulim member of parliament and Public Accounts Committee (PAC) member Abdul Aziz Sheikh Fadzir ( photo ) at a media briefing in mid-March this year.

This strange and convoluted deal came about from the implementation of the federal government’s private finance initiative (PFI) initiative, first announced during the time of fifth prime minister Abdullah Ahmad Badawi, which sought to adopt a concessional procurement model widely practiced in other countries such as the United Kingdom and Australia.

However, there are a number of things wrong with how Putrajaya has proceeded with this procurement method.

While the established practice for PFI projects to have the private sector source for their own financing, the Malaysian version sees the government providing the funds.

And these funds, totalling RM30 billion so far, were raised in a roundabout manner which critics say was intended to keep things off the government’s balance sheet.

Transparency is lacking too: project awards are shrouded in secrecy and even appear unnecessary in some cases, with no known process for evaluation and accountability (see the third part of this series).

Most curious of all is the apparent intention of the entire PFI idea, which seems to provide contracts and concessions to bumiputera contractors.

This raises questions on who these contractors are and whether they are benefitting from political connections in receiving these project awards.

In this part of the series KINIBIZ looks at the dodgy manner of Pembinaan PFI’s fund-raising and its implications as well as why Putrajaya is driving PFI in the wrong lane.

For the full story go to KiniBiz .