Posted: 23 May 2008 at 7:15pm | IP Logged

Ok, it's been quite sometime since I last logged in. Gosh...there were so many PMs coming in...the latest ones asking me to comment on the recent landslide cases in Kuala Lumpur and Ulu Klang...

Well, if you look carefully in the 'ancient threads' talking profusely about the same issue, you'll find out how I think and other readers think...and I still stand on my views..not budging.

The reason why I logged in today is because I want to know :

Any global malaysians that I know currently living in Ohio - Youngston/Boardman (Pensylvania) or anywhere near, please e-mail me or PM me...serious ones only..thanks

Posted: 02 December 2007 at 12:37am | IP Logged

There will be a better future for real-estate after all..It will be a bit sluggish in the initial stage but the long term benefit that I'm really looking at (some I've highlighted in the news..Good analysis Loong Tse Min!!

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The Star Business

Privatisation, mergers sweeping across property firms

NEWS ANALYSIS - By LOONG TSE MIN - tsemin@thestar.com.my 

WHILE property development companies have not hogged the limelight in many merger exercises, they are among those most affected as winds of privatisation blow across Bursa Malaysia. 

In many cases, they are part of the deal as seen in the merger initiated by Synergy Drive Bhd (now Sime Darby Bhd). In other smaller cases, the property development companies are directly involved.  

For example, Eastern & Oriental Bhd's (E&O) proposed merger with 63% subsidiary E&O Property Development Bhd (E&O Prop) announced earlier this week. 

Sime UEP Properties Bhd, a listed subsidiary of the original Sime Darby (now renamed Kumpulan Sime Darby Bhd), was injected into the merged entity prior to the new group's listing on the main board yesterday. 

Sime UEP formed about 4.7% of the KL Property Index (KLProp) as at June 23 last year. 

Other significant property developers that have been involved in merger-cum-privatisation deals this year are Permodalan Nasional Bhd companies, Island & Peninsular Bhd (I&P) de-listed on June 13 and Petaling Garden Bhd (PGarden) de-listed on June 26. 

Both I&P and PGarden had substantial weightings in the KLProp of 3.4% and 1.9% in June last year. 

It can be argued that since many of these property companies were undervalued in the market with their stock prices not performing, privatisation was an attractive and logical option.  

With these companies now privatised, or merged with their still-listed parent companies, management will have to show that the unrealised value is now being unlocked or there is a future strategy that will create more value than under the previous structure. 

In fact there is talk in the marketplace that immediate impact would be seen in the next few months among some newly merged entities, through new projects or ventures overseas. 

So, investment exposure can still be had with some soon-to-be de-listed property counters through their listed parent companies, such as WCT Land Bhd and E&O Prop via WCT Engineering Bhd and E&O respectively. 

Overall, the privatisation or merger of laggard property counters is a good thing, expected to create value under new corporate structures or strategies. 

However, in terms of cleaning up the sector of under-performing and illiquid counters, there are still many smaller property counters in the recovery stage, having weathered a number of lean years previously. Even so, the spate of merger activities could already be making an impact on the KLProp, which has since Dec 29 last year risen from just below 700 points to yesterday's close of 1,031.14.  

However, the analyst community does not seem to be looking at the property index at all, nor are there concerns on the lack of investment options with several large property counters being privatised. 

There is also a feeling among retail investors that some of these counters with their small free-float and low liquidity should not have been listed in the first place. 

Posted: 26 November 2007 at 4:00pm | IP Logged

Wow..it's been quite a while since I last heard of this project...I recalled hearing stories about this project since 1992 to be exact when I was working in another mega hydro-electric dam project.

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The Star Business November, 26 2007

Will they come to an agreement?

Stories by DANNY YAP and FINTAN NG

Capacity payments to be discussed again. 

LAST week, Energy, Water and Telecommunications Minister Datuk Seri Dr Lim Keng Yaik said there would be another round of negotiations between Tenaga Nasional Bhd (TNB) and the independent power producers (IPPs) whose power purchase agreements (PPAs) are near to expiry.  

In this round of negotiations, the issue of capacity payments would be discussed.  

The first round of negotiations with the IPPs foundered in March on a number of issues, including that of capacity payments and the issue of extending the PPAs of the first generation IPPs.  

An artist¡¦s impression of the RM1.8bil Bakun hydroelectric dam. The 205-metre high concrete face rockfill dam of the Bakun hydroelectric facility is almost completed. The reservoir is behind the wall.

Currently, first generation IPPs are being paid 15 to 16 sen per kilowatt-hour (kwh), second generation IPPs about 13 sen per kwh and third generation IPPs around 11 sen per kwh, said an analyst with a local investment bank.  

According to the terms of the PPAs, TNB is obliged to pay for all the power that is generated by these companies, which includes the excess capacity.  

The negotiations come at a time of rising fuel costs due to the high price of crude, which reached an intra-day high above US$99 per barrel on the Nymex in the middle of the week. Most of the power plants in the country use gas, coal or oil, or a combination, to generate power. These sources of energy to generate power are subsidised by Petronas. 

Gas sold by Petronas to TNB and the IPPs was fixed at RM6.40 per million British thermal units since May 1997 when crude was more than US$70 per barrel cheaper than it is now. 

In total, the national oil and gas company has subsidised RM15.6bil in its financial year ended March 31, 2007, to keep gas prices at this level, which is about a quarter of current market price. This is also an increase of 9.1% from a year earlier. 

A breakdown of the subsidy shows that RM5bil went to TNB, RM6.7bil to other power producers and RM3.9bil to industrial, commercial and residential users.  

Given the subsidy costs and the Government¡¦s wish that TNB curbs its operating costs by reducing excess capacity, this has become trickier since contracts have been signed and a number of the first generation IPPs¡¦ agreements would only be expiring from 2012 onwards. First generation IPPs are those, which signed agreements between 1994 and 1996.  

According to a source, no more licenses are being issued for the construction of thermal power plants.  

¡§The last one issued was for Jimah Power Generation Sdn Bhd, which is developing a coal-fired plant in Negri Sembilan,¡¨ he said, adding that the Electricity Supply and Tariff Planning Development Committee feels there is sufficient power till 2015 due to the reserve margin. 

Datuk Seri Dr Lim Keng Yaik

In a research note on Nov 20, MIMB Investment Bank Bhd said the only way to resolve the outstanding issues was by getting all the parties together, including the bond holders of the various power plants.  

¡§The problems of high fuel costs, tariff rates and capacity payments are all connected; in order for them to agree on anything, all parties should get involved,¡¨ an analyst with the bank said.  

He said the power plants operated by the IPPs were not on the build-operate-transfer platform, meaning the power plants would still belong to the companies that built and operated them.  

¡§At the end of the contract, these plants would still have a good few years left in them, so why not let them continue operating? It would help to bring up supply of power given that demand is sure to rise,¡¨ he said, adding that demand for power would rise by 6.6% and 6.7% annually from now till 2015.  

This, of course, is based on the assumption that TNB can come to an agreement with the companies whose contracts are nearest to expiry.  

¡§You can¡¦t just compute demand up to 2015. If TNB and the IPPs come to an agreement where the IPPs can continue to operate the plants and TNB is able to pay a lower price, then it¡¦s a win-win situation,¡¨ he said.  

This also comes at a time when Synergy Drive Bhd has obtained government approval to take up a 60% stake in Sarawak Hidro Sdn Bhd, the owner of the 2,400MW Bakun hydroelectric dam project.  

Synergy Drive is also planning to build two 700km undersea transmission cables connecting Bakun to the peninsula. When both cables are operational by 2015, 1,600MW would be transmitted to the peninsula.  

The country¡¦s energy sufficiency also hinges on whether the plants, whose contracts are expiring, would have their contracts renewed or merely extended for a period of time.  

If the contracts are not renewed or extended, the hydroelectric plants would have to shoulder the burden in making up the loss in capacity, which according to MIMB Investment Bank, would be reduced to 22% in 2012 and 16% in 2015.  

There are three existing hydroelectric power plants in the peninsula - in Pahang, Perak and Terengganu - with an installed capacity of 1,911MW, according to the TNB website.  

Together with a 66MW capacity hydroelectric plant in Sabah, they account for only 9.7% of the total installed capacity in the country, according to TNB¡¦s annual report for the financial year ended Aug 31, 2007.  

This excludes the state grid of Sarawak, which is operated by the state electricity board, Syarikat SESCO Bhd.  

Sarawak has an installed capacity of 750MW.  

There is one hydroelectric power station with an installed capacity of 100MW. There is also another 600MW in planned capacity to be generated by two hydroelectric plants in Pahang and Terengganu, which are scheduled to be operational by 2012.  

Hydroelectric power, while cheaper, accounts for just over 17.6% of TNB power generation capacity in the country, and thermal (fossil fuel-based) power accounts for the rest, according to TNB¡¦s latest annual report. Taken together, the power generation capacity of TNB and the IPPs connected to the national grid is 19,722.5MW from both thermal and hydroelectric sources.  

According to TNB¡¦s annual report, the maximum demand trend till Aug 8 this year was 13,620MW.  

An MIMB Investment Bank Bhd research note said the current reserve margin, following the Tanjung Bin power plant¡¦s third phase becoming operational on Aug 31, is 44%.  

TNB also noted in its annual report that there was a 22.5% increase in IPP cost, principally from the additional capacity payments to the Tanjung Bin plant upon commissioning of the first and second phases.

Posted: 22 November 2007 at 11:38pm | IP Logged

Just to share the partial answer that I've given to an e-mail query about the nature of work or JD for Inspector.

Posted: 14 November 2007 at 6:27am | IP Logged

Corpsbabe, your assignment looks ok. The final comment is, one party's effort to try to get out of their rightful liability means another party's loss.

Always remember to conduct yourself with the utmost business ethics. The Construction bussiness already has to many crooks, cheats and liars.

Posted: 12 November 2007 at 2:35pm | IP Logged

Dear Nik and ahvincent,

Many thanks for your comments and sharing of knowledge and information.  It was helpful in my research.  I thought I would like to share with you what I have learnt from this assignment of mine, and perhaps it could be interesting for those who has not seen it from this point of view before. I have managed to tie up the loose ends but basically the gist of what I wanted to know goes like this:-

 Whether we can try to exclude liability:-

Where the exclusion is for liability for damage to property, liability; whether effectively excluded or otherwise, turns on the construction of the contract. This is illustrated in Chin Hooi Nan v Comprehensive Auto Restoration Service Sdn. Bhd. where the claimant paid some money to the defendants to have his car waxed and polished. The car was damaged by one of the defendants’ employees when it was driven to the basement of the building. In a claim of negligence against the defendants, they argued that the exemption clause was printed on the back of the receipt, which was given to the claimant and hence would be deemed to exonerated the defendants from liability. The clause was worded as follows: -

·         The company is not liable for any loss or damage whatsoever of or to the vehicle, its   

       accessories or contents.

             ·        Vehicles and goods are left at owner’s risk.

The court held that the defendants have the burden of proving that the damage to the car were not due to their negligence and misconduct, hence the defendants do have a duty of care towards the claimant, ie they must show that they had exercised due diligence and care in the handling of the car. Since the defendants had failed to do this, they were held liable to compensate the claimant for the costs of repair, of hiring another car during the repair period and of engaging an independent adjuster.

Liability for defects remedied during the warranty period (defects liability period hereafter referred to as ‘DLP”)

This is with regards to defects which emerge after the contractor has completed and the DLP is over. If construction work is carried out under a contract which provides for the contractor to make good defects during a DLP, then it is not open to the employer to remedy the defects itself during that period. The contractor, in those circumstances, has not only the right but also the duty to remedy the defects.

If the employer goes ahead and remedies them itself, then the damages it can recover are limited to the amount that it would have cost the builder to remedy the defects. This is because the contract breaker has not caused the employer’s loss, the employer has done so by remedying defects which it is the right of the contractor to remedy.

Therefore, as a matter of causation it might be said that the builder has not caused the remedial work costs to be incurred. So perhaps the situation can be explained by some sort of restitution to the employer of the saving (in terms of the cost of remedying defects) made by the contractor.

Thus, in this sort of situation, there is no issue arising if defects are detected during the warranty period because the contractor has the right, and also the duty to remedy the defects.

Liability for defects remedied after the warranty period ( ‘DLP”)

In the absence of words to the contrary, the contractor’s liability for not completing the works in accordance with the contract continues until barred by the Limitation Act and thus extends for the period of 6 years for a simple contract, and 12 years for a deed, as well as for tort from the date when the cause of action against him arose.

A cause of action for ordinary failure to build in accordance with the contract normally arises at practical completion. A cause of action for failure to comply with defects liability obligations normally arises at such later date after practical completion as the contract prescribes for carrying out those obligations. However, if defects are concealed by the contractor, this may result in an extension of the limitation period. A contractor may be liable under the express terms of a guarantee, warranty or indemnity for many years.

Where there is a defects clause and at the end of the DLP, a binding and conclusive final certificate of fitness is given by an architect, then, in the absence of fraud or other special circumstances, the contractor’s liability in contract for any defects which may appear thereafter comes to an end, and this, notwithstanding that the certificate may have been granted after the commencement of legal proceedings in respect of the defects in question.

As such, in the event that defects are detected after the warranty period, an action can be brought by the Claimant either in tort, or in contract.

That's basically a small bit of some of the things which I researched. I'm sure alot of you are aware of these points already but just the same, hope it's helpful for those who don't.

Cheers!

Posted: 12 November 2007 at 11:33am | IP Logged

Dear Nik and ahvincent,

Many thanks for your comments and sharing of knowledge and information.  It was helpful in my research.  I thought I would like to share with you what I have learnt from this assignment of mine, and perhaps it could be interesting for those who has not seen it from this point of view before. I have managed to tie up the loose ends but basically the gist of what I wanted to know goes like this:-

Whether we can try to exclude liability

1. Where the exclusion is for liability for damage to property, liability; whether effectively excluded or otherwise, turns on the construction of the contract. This is illustrated in Chin Hooi Nan v Comprehensive Auto Restoration Service Sdn. Bhd. where the claimant paid some money to the defendants to have his car waxed and polished. The car was damaged by one of the defendants’ employees when it was driven to the basement of the building. In a claim of negligence against the defendants, they argued that the exemption clause was printed on the back of the receipt, which was given to the claimant and hence would be deemed to exonerated the defendants from liability. The clause was worded as follows: -

          ·         The company is not liable for any loss or damage whatsoever of or to the vehicle, its accessories or contents.

          ·         Vehicles and goods are left at owner’s risk.

2. The court held that the defendants have the burden of proving that the damage to the car were not due to their negligence and misconduct, hence the defendants do have a duty of care towards the claimant, ie they must show that they had exercised due diligence and care in the handling of the car. Since the defendants had failed to do this, they were held liable to compensate the claimant for the costs of repair, of hiring another car during the repair period and of engaging an independent adjuster.

Liability for defects remedied during the warranty period (defects liability period hereafter referred to as ‘DLP”)

3. This is with regards to defects which emerge after the contractor has completed and the DLP is over. If construction work is carried out under a contract which provides for the contractor to make good defects during a DLP, then it is not open to the employer to remedy the defects itself during that period. The contractor, in those circumstances, has not only the right but also the duty to remedy the defects.

4. If the employer goes ahead and remedies them itself, then the damages it can recover are limited to the amount that it would have cost the builder to remedy the defects. This is because the contract breaker has not caused the employer’s loss, the employer has done so by remedying defects which it is the right of the contractor to remedy.

5. Therefore, as a matter of causation it might be said that the builder has not caused the remedial work costs to be incurred. So perhaps the situation can be explained by some sort of restitution to the employer of the saving (in terms of the cost of remedying defects) made by the contractor.

6. Thus, in this sort of situation, there is no issue arising if defects are detected during the warranty period because the contractor has the right, and also the duty to remedy the defects.

Liability for defects remedied after the warranty period ( ‘DLP”)

7. In the absence of words to the contrary, the contractor’s liability for not completing the works in accordance with the contract continues until barred by the Limitation Act and thus extends for the period of 6 years for a simple contract, and 12 years for a deed, as well as for tort from the date when the cause of action against him arose.

8. A cause of action for ordinary failure to build in accordance with the contract normally arises at practical completion. A cause of action for failure to comply with defects liability obligations normally arises at such later date after practical completion as the contract prescribes for carrying out those obligations. However, if defects are concealed by the contractor, this may result in an extension of the limitation period. A contractor may be liable under the express terms of a guarantee, warranty or indemnity for many years.

9. Where there is a defects clause and at the end of the DLP, a binding and conclusive final certificate of fitness is given by an architect, then, in the absence of fraud or other special circumstances, the contractor’s liability in contract for any defects which may appear thereafter comes to an end, and this, notwithstanding that the certificate may have been granted after the commencement of legal proceedings in respect of the defects in question.

10. As such, in the event that defects are detected after the warranty period, an action can be brought by the Claimant either in tort, or in contract.

That's basically a small bit of some of the things which I wanted to find out. I'm sure alot of you are aware of these points already but just the same, hope it's helpful for those who don't.

Cheers!