Last week, Pasdec Holdings Bhd announced the proposed disposal of Pasdec-Mega Sdn Bhd (PMSB) — a company that is undertaking the development of a 5mw mini hydro power plant in Sg Benus, Kg Janda Baik, Bentong, Pahang, for a cash consideration of RM10.8 million — to privately held SPAC Sdn Bhd.

SPAC is a company wholly-owned by Sy Choon Yen, but with former Pasdec managing director Datuk Mohd Khairuddin Abdul Manan as a director. Mohd Khairuddin left Pasdec in May 2017 when his contract expired.

In its Bursa Malaysia announcement, Pasdec explains the rationale for the proposed disposal is that construction costs to complete the project have risen significantly, owing partly to the additional costs needed to repair the damaged pipes caused by a flood in 2020. The problem was compounded by recent increases in the price of materials.

“The board has decided that it is much [more] beneficial for the company to dispose of Pasdec Mega and the Sg Benus project to the purchaser, as the purchaser has specialised experience and expertise to complete the Sg Benus project,” it says.

Pasdec goes on to say that the RM10.8 million from the sale of PMSB will be used to settle borrowings and repay its advances to the company.

But what sort of “specialised experience and expertise” does the purchaser SPAC have that Pasdec does not? Instead of hiving off the project, should Pasdec have sold a portion of PMSB or hired people with the expertise and experience, instead of selling it lock, stock and barrel?

What is the quantum by which costs have escalated at PMSB, and have the parameters changed so much as to render the project not viable?

But if the project has been rendered not viable, why is SPAC buying it; and what does it see in the project that Pasdec does not?