R2W
In major infrastructure project where private entities are roped, the
government approach of lending money is unacceptable. In the case of the
WCESB, the government is offering a loan of RM2.24 billion at 4%
interest p.a. and will pay the 3% of the commercial bank interest on the
loan that WCESB would take from the commercial banks for a period of 22
years. The estimated loan amount would be RM7.07bill-RM2.24bill
=RM4.83bill. The interest amount for the period of 22 years would be
RM1.84bill with the assumption that the annual repayment amount of
RM303.07 mill. This would mean effectively the government is funding a
total of RM4.08bill out of the RM7.07bill which is equivalent of 58% of
the total project cost.
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