Ministry of Finance in Malaysia has approved Malaysia Airports Holdings Bhd (Malaysia Airports) proposal to immediately proceed with the Penang International Airport expansion plans in phases. PIA is a mid-sized airport, but it is one of the busiest airports in Malaysia and there were certain issues hurdling the project commencement. With the approval, Malaysia Airports is ready to start the project immediately.
Malaysia Airports has been working on this expansion project and had brought in ICONIC Project Finance Advisory to coordinate the detailed construction plans after the necessary engagement with the Ministry of Transport (MOT), Malaysian Aviation Commission (MAVCOM) and the Penang State Government.
Malaysia Airports is now in discussion with various parties on the options for investment and funding models. It is also to be noted that an application of Malaysia Airports to fully fund the project under the proposed MAVCOM Regulated Asset Base (RAB) framework has been submitted and is now waiting for approval. Malaysia Airports is indeed in a position to fully fund the project.
Once the necessary plans are approved, construction is expected to start in the first quarter of 2020.
Penang state government also welcomed the announcement of Malaysia Airports and stated that all the issues raised before, including equity and operation of the airport in case the would like to implement private finance initiative (PFI), have been resolved.
It is the third-busiest airport in Malaysia in terms of passenger traffic and the second-busiest in terms of cargo tonnage. Currently is has the capacity to handle up to 6.5 million passengers per year, and its cargo centre can handle 360,000 tonnes of cargo a year. It has two runways about 3.35 km in total length.
The Project Finance team advising was led by VP Partner Renaud Niche and MD, Sal Fischer. They were both supported by VP Partner Renaud Niche along with PFI Associates Tim Morgan, Alexander Truncan and Steve Russel.
Renaud Niche commented:
“I’m delighted that PIA have opted for IPFA to advise on a highly strategic and complex transaction, clear recognition of our ability to provide high-end cross-border multi-disciplinary advice across all service lines in our core sectors of expertise. I’m particularly proud that we were able to work and co-ordinate seamlessly both with IPFA colleagues and fellow counsel at other firms”.
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