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Wednesday, 30 May 2018

(The Star) Sabah highway next to get the chop?

PETALING JAYA: With the Pakatan Harapan government confirming it has dropped the Kuala Lumpur-Singapore high-speed rail (HSR) project, attention has now turned to which mega-infrastructure projects could be reviewed next.

Under its manifesto, the Pakatan coalition identified a number of mega-projects initiated by the previous administration that it planned to review – to save the country billions of ringgit.

“Mega-projects such as the mass rapid transit, light rail transit (LRT) extension, LRT line 3, the East Coast Rail Link (ECRL), the HSR project and the Pan Borneo Highway are a few examples of hidden expenses using the name of special-purpose vehicles,” it said.

Sources said that next on the radar could possibly be the Sabah portion of the Pan Borneo Highway estimated to cost the federal government RM12.8bil.

Politicians in Sabah and Sarawak aligned to Pakatan Harapan are hoping for the federal government to continue with the Pan Borneo Highway that is estimated to cost RM29bil.

Towards this end, Sabah Chief Minister Datuk Seri Mohd Shafie Apdal last week said he was confident the project would go on.

Meanwhile, Sarawak Pakatan chairman Chong Chieng Jen said a few days after the general election (GE) that the project would continue – but auditing would be carried out on project cost and contractors involved.

The 2,325km highway that is due for completion in 2021 straddles the two largest states in Malaysia, Sabah and Sarawak. It is toll-free.

It will run some 1,089km from Telok Melano in Sarawak to Merapok, near the checkpoint with Brunei, before taking off again on a 1,236km trip in Sabah. In Sabah, the project is divided into three phases – Sindumin to Tawau, Tamparuli to Ranau, Kemanis to Keningau and ending in Tawau.

In Sarawak, the work is broken into 11 packages under the first phase of the highway and all sections of the work are being implemented.

In Sabah, the work is broken into 35 work packages worth RM12.8bil with seven packages implemented between April 2016 and December 2017.

“The bulk of the work in Sabah has not been carried out yet, which makes it easy to defer the project. In Sarawak, work on the ground in phase two between Miri and the border of Sabah has not been carried out yet,” said a source.

According to a recent report by CIMB Research, the first phase of the Sarawak portion (worth RM16bil) has been fully awarded. The Sabah portion (worth RM12.9bil) was to have proceeded with contract rollout in the months ahead had the Barisan Nasional remained in power.

“The cost of the Sabah portion is 20% lower than that of Sarawak,” said CIMB.

As for the Sarawak portion of the Pan Borneo Highway, sources said 50% of the work has been done and has resulted in cost savings of more than RM1bil.

For Sabah, many had expected the award of the balance remaining packages to pick up post-GE.

“Seven packages worth RM3.2bil have been awarded, leaving the balance packages to be awarded in the second quarter of 2018 onwards, with an estimated value of RM9.7bil,” CIMB had stated in its recent research report.

According to the research house, as at end-2017, five packages under the Sabah portion of the Pan Borneo Highway were under construction. It said two more packages were approved and launched, while 10 more were submitted to the Finance Ministry for approval.

Sources said the five packages are facing “huge cost overruns” and the previous federal government was already having problems justifying the cost.

The Sabah portion of the highway started off on a bad footing, as there was not one single company taking the lead as the project development partner (PDP).

MMC Corp Bhd and UEM Group Bhd each had 20% as PDP, while the remaining 60% has been given to six private companies linked to the previous state government,” a source said.

Speculation had been rife that the previous federal government was even contemplating giving the project to a company from China to complete it on a fixed cost basis, considering the cost overruns.

Apart from the Pan Borneo project, a slew of big-ticket construction projects were announced under the previous government. Among them is the ECRL project.

According to a source, the project is in the midst of being reviewed by the Pakatan government.

“If a project is not done in the interest of the people, it can be renegotiated. But for this, we need Parliament to convene,” said the source.

With an estimated cost of RM55bil, the ECRL will reduce travel time from Bentong to Gombak from the current 90-minute drive to 25 minutes, and from Gombak to Kota Baru to less than four hours compared to the current seven hours by road. The project was targeted to be completed by 2026.

Council of Eminent Persons member Tun Daim Zainuddin, however, has said the ECRL could cost RM11bil more than the RM55bil budget. At this point, the ECRL, which has been awarded to China Communications Construction Company Ltd, is about 13% complete.

On Monday, Prime Minister Tun Dr Mahathir Mohamad called off the HSR project, claiming that the project would not be beneficial and would cost the country a “huge sum of money”.

The project, which was worth RM60bil, is in cooperation with Singapore.

and has already seen the awarding of two PDP contracts worth RM30bil to RM40bil.

The contracts were secured by the joint ventures of Malaysian Resources Corp Bhd with Gamuda Bhd, and YTL Corp’s Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd with TH Properties Sdn Bhd, a subsidiary of Lembaga Tabung Haji.