THE Sabah Finance Ministry sees no wrongdoing in SMJ Energy Sdn Bhd’s acquisition of the debt-ridden Sabah International Petroleum from Sabah Development Bank.
Ministry secretary Datuk Mohd Sofian Alfian Nair said allegations of conflict of interest in the corporate exercise are unfounded because all three entities are owned by the Sabah government.
“The Ministry of Finance unequivocally refutes any allegations questioning the legitimate basis for the acquisition by SMJ Energy Sdn Bhd of Sabah International Petroleum,” he said.
“As a result of this state-supported corporate exercise, SMJ Energy not only reduced the high-interest costs of the legacy debts owed by Sabah International Petroleum but also strategically recapitalised Sabah Development Bank Bhd through the redemption of Sabah International Petroleum debts owed to Sabah Development Bank,” he said.
Alfian was responding to Datuk Seri Mohd Shafie Apdal's call for an investigation into the acquisition.
Shafie had said that the technical adviser of SMJ Energy and the chairman of Sabah Development Bank were the same person, suggesting a potential conflict of interest.
Alfian said the Sabah government was responsible for the financial problems of both Sabah International Petroleum and Sabah Development Bank.
“The acquisition has allowed SMJ Energy to consolidate and restructure the ailing oil and gas company and this has resulted in benefits for the state government,” he said.
SMJ Energy expects to receive about RM150 million in dividends a year for the next 13 years while Sabah International Petroleum has generated strong and consistent cash flow for SMJ Energy, he said.
“Since the acquisition, RM271 million has been channelled to SMJ Energy to date, reducing its debt burden,” he said.
In 2023, SMJ Energy generated substantial profits of RM217 million (unaudited) with an asset base of RM5 billion, while also presenting RM50 million to the state government the same year.
Alfian also denied Shafie’s claim that SMJ Energy had suffered a loss of RM7 million due to the commitments arising from its issuance of sukuk bonds.
“As a start-up company, SMJE had to incur pre-operating costs and expenses. These expenses have no relevance to the Sukuk issued by SMJE,” said Alfian, adding however it was the Sabah International Petroleum high-interest loan that had been the challenge.
He said SMJ Energy has successfully issued sukuk at a much lower interest rate while the refinancing has allowed the company to swap its debts to pay a lower interest.
He said this had resulted in savings of more than RM60 million in financing charges in 2023 to SMJ Energy. – May 30, 2024.
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