(AFP) The government may miss a June 30 deadline to repay the RM6 billion debt it took over from two light railway operators, a newspaper said today.

Business Times , quoting banking sources, said the finance ministry has told the country's Corporate Debt Restructuring Committee that it may miss the deadline because of a delay in issuing bonds to raise the money.

A finance ministry spokesman had no immediate comment on the report.

"The government is looking at new repayment dates. The authorities are very firm about honouring their pledges," the paper quoted one source as saying.

"The government is working on putting a better financial structure in place."

Last December the government announced it would take over the debt from the two private light rail transit (LRT) firms as part of a major restructuring of Kuala Lumpur's public transport system.

Poor usage

The acquisition was to be financed through a series of bond issues and the railway networks would be leased back to the private firms to operate.

Opposition parties criticised the deal as another "bailout" of favoured firms. The government said the 1997/98 regional financial crisis made it difficult for the private companies to repay capital or raise new loans.

Apart from buses, the LRT lines were the first public transport system in the traffic-clogged city of 1.5 million. But usage has failed to meet expectations.

The city has 56 kilometers of LRT track, run by Sistem Transit Aliran Ringan (STAR) and Projek Usahasama Transit Ringan Automatik (PUTRA).

PUTRA is owned by debt-ridden conglomerate Renong.

Business Times said lenders for the LRT projects include Commerce International Merchant Bankers, PhileoAllied and RHB Bank.