KUALA LUMPUR, March 18 — The Public Accounts Committee (PAC) today declared that Putrajaya had put in place a “sound” mechanism to raise funds for public infrastructure projects through Syarikat Pembinaan PFI Sdn Bhd.

PAC Chairman Datuk Nur Jazlan Mohamed said they were satisfied with the explanation by Finance Ministry officials on how the federal government issued bonds in the form of federal land leases through Pembinaan PFI to repay RM30 billion in loans from the country’s two largest pension funds.

“It is quite a safe venture, where the government still owns the land... it’s just a case of money going from the left pocket to the right pocket,” he said at a news conference after a meeting with ministry officials on the matter.

“I would say this is an innovative way of financing that will not add to the government’s debt,” he added, sidestepping a question on whether it is a way to avoid having the multi-billion ringgit loan reflected on Putrajaya’s books.

Yesterday, DAP’s Serdang MP Dr Ong Kian Ming urged the PAC to grill the Finance Ministry on RM27.9 billion in liabilities racked up as at end 2012, raising questions as to its procurement methods and its ability to repay its debts.

He also questioned why the federal government was channelling funds for development projects through Pembinaan PFI instead of using allocations from the country’s annual budget, among other things.

Nur Jazlan today said that Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah had explained to the PAC that Pembinaan PFI has so far utilised RM28 billion as at 2013 for public infrastructure projects, which were “generally issued through open tender”.

The funds were sourced from two tranches of loans from the Employees Provident Fund (EPF) and civil servants’ pension fund Kumpulan Wang Persaraan (KWAP), with the first payout of RM20 billion issued in 2006 and the second tranche of RM10 billion issued in 2012.

The loans will be repaid through bonds issued on a 15-year tenure up to 2027 for the first tranche and a 10-year tenure up to 2023 for the second tranche.

Nur Jazlan said the PAC was satisfied that the loan arrangement between Putrajaya and the two pension funds is mutually beneficial as the federal government secured financing below the standard corporate interest rate charged by commercial banks, while the pension funds in turn earn interest at 15 basis points above the Malaysian Government Securities (MGS) indicative price.

“If the government were to go through the usual process of securing funds (through the budget), it would take some time. This is just a way to fast track funding for priority public infrastructure projects,” he said.