This article first appeared in The Edge Malaysia Weekly on July 15, 2024 - July 21, 2024

THE federal government is said to be mulling over the removal of Ekovest Bhd (KL:EKOVEST) as the project delivery partner (PDP) of the long-delayed River of Life project, which is facing cost overruns, sources familiar with the matter tell The Edge.

Ekovest’s wholly-owned KL Bund Sdn Bhd is the PDP, project coordinator and manager of the RM4.4 billion River of Life project that was launched in 2011 under the Economic Transformation Programme for Greater Kuala Lumpur to transform about 800ha of the Klang River and Gombak River basins into habitable waterfronts with high economic value within seven years.

“I think the decision [to terminate] could be finalised soon and Ekovest may or may not be aware of it but this comes after the Auditor General’s Report on Federal Agencies’ Activities 2024,” a source says.

The recently released report states that the River of Life project is behind schedule with none of its objectives having been achieved in 13 years, although some RM3.92 billion or almost 90% of the allocated RM4.363 billion has been spent.

The River of Life project is under the supervision of the Federal Territories Department and involves 12 components, which are still in the pre-implementation stage. There are also eight components with completion rates of between 21% and 97.3%, the AG’s report notes.

According to the report, none of the project’s objectives has been fully achieved, in particular improving river water quality. The government’s plan to generate up to RM4 billion from land sales to help finance the project had failed due to lower-than-expected proceeds.

In a response via email to The Edge on the possible termination, a spokesperson for Ekovest says, “As the PDP of the government, Ekovest’s contracted role was to mainly provide horizontal coordination with up to 42 agencies while the respective agencies under multiple ministries spearheaded the River of Life project.

“Under the PDP contract, Ekovest was only permitted by the government to tender for/participate in beautification works (via Swiss Challenge) but not in river-cleaning components.”

A person familiar with developments at Ekovest says, “The news of a termination is a malicious rumour … as far as I can say. Ekovest has completed all its work as contractor and discharged its duties honourably as PDP.”

As a diversified group with businesses spanning construction, property development, plantations and toll road operations, among others, Ekovest had a number of contracts under the River of Life banner, other than being the project coordinator. In October 2016, for instance, Ekovest secured a RM255.49 million contract from Dewan Bandaraya Kuala Lumpur (DBKL) for the improvement and beautification works and construction of an interceptor system and related works for two packages of the River of Life project, namely Package 4A, which is in the vicinity of Sungai Klang, from Jalan Kinabalu to Jalan Maarof, and Package 4B involving Jalan Scott, Jalan Tun Sambanthan, Jalan Thambipillay, Jalan Sultan Abdul Samad, Jalan Vivekananda and Jalan Rozario.

Then in November 2016, the company secured a RM157.25 million contract from DBKL for the improvement and beautification works of Package 1C, which is in the Dataran Merdeka, Jalan Tun Perak and Jalan Tun Tan Cheng Lock vicinity, and Package 1D, involving the Masjid India area, for the construction of an interceptor system and related works to improve the river water quality.

In April 2017, Ekovest won a RM79 million design-and-build contract from DBKL for a job called Blue River Project as part of the River of Life development.

Then in March 2018, the company bagged a RM99.89 million contract to undertake the improvement and beautification of Taman Titiwangsa in Kuala Lumpur as part of the second phase of the River of Life project.

All the above contracts amounted to RM590 million in total. But there were other smaller contracts as well such as for the removal of large stones and sediment at the intersection of Gombak River and Batu River, and related works that was secured in February 2016.

News reports have it that Ekovest was given 12.14ha of land within the River of Life project and that it was on this land that Ekovest planned the KL River City development that was launched in July 2017.

It is unclear if the termination of Ekovest as the PDP of the River of Life project will impact its aspirations for the KL River City development.

According to news reports, Ekovest is slated to generate RM16 billion in gross development value from the KL River City project.

For its nine months ended March 31, 2024, Ekovest booked a net loss of RM58.09 million from revenue of RM875.36 million. Its loss widened from RM15.45 million on turnover of RM837.58 million in the previous corresponding period.

Despite the red ink, in the notes appended to its unaudited accounts, Ekovest says it “remains optimistic of delivering positive financial results and is confident each of the group’s segments would contribute positively to its performance in the financial year ending June 30, 2024”.

As at end-March this year, Ekovest had cash and bank balances of RM173.72 million, investment funds of RM129.5 million and short-term deposits of RM91.74 million. On the other side of the balance sheet, Ekovest had short-term borrowings of RM408.97 million and RM402.24 million of long-term debt commitments. The company also had reserves of RM1.1 billion as at end-March this year and RM5.31 billion Islamic medium-term notes. Net cash generated from operating activities stood at RM273.54 million for the period in review.

Last Friday, Ekovest’s share price closed at 50.5 sen, translating into a market capitalisation of RM1.5 billion. 

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