UEM to sign new 2nd Penang bridge pact

UEM Group, together with its Chinese partner, expects to sign a new agreement to build the second Penang bridge next month, its top executives said.

The new contract will cap the project's total cost at RM4.3 billion but the UEM-China Harbour Engineering Co Ltd consortium can claim extra expenses from fluctuating material costs, they said.

The new deal follows the government's decision to allow for an open tender of the bridge's toll concession, amid rising costs due to soaring energy and commodity prices worldwide. The move reversed the original plan to let UEM, via subsidiary UEM Builders Bhd, manage the concession once the bridge is completed.

"The (new) contract agreement has been finalised and we hope to sign it soon," group chairman Tan Sri Dr Ahmad Tajuddin Ali said.

Tajuddin and managing director Datuk Ahmad Pardas Senin said the group was managing the construction cost partly through forward- and pre-buying of key materials like steel and cement.

They said the group was well poised to bid for the toll concession when the time comes. UEM is bullish about its chances, given its experience and expertise in highway and toll operation and maintenance locally and abroad.

Tajuddin and Ahmad Pardas were speaking at a press conference after UEM World Bhd's annual general meeting in Kuala Lumpur yesterday.

Ahmad Pardas, who is also group chief executive officer, said the bridge's design had been tweaked with some "esthetic changes" but the alignment remains as in the original plan.

Tajuddin, meanwhile, said the listing of the group's property arm, UEM Land Bhd, is expected to take place in early November. The listing is part of the UEM group's restructuring announced in February this year.

The planned capital repayment to UEM group shareholders, another key component of the restructuring, should be made by the third quarter, he added.

On revenue growth this year, Ahmad Pardas said the target set under its KPI (key performance indicator) is achievable despite a more challenging business and economic environment.

He added that construction, engineering, healthcare and property divisions would continue to contribute significantly to the company's performance.

UEM announced recently a 13 per cent growth each in revenue and return on equity under its KPI targets for the year ending December 2008.

Last year, the group's revenue grew 46 per cent to nearly RM7 billion, although the growth is still short of its targeted 65 per cent under its KPI. Group net profit rose fourfold to RM939.2 million from RM194.9 million previously.

The performance was largely due to major land sales in Nusajaya in Johor, the benefits from the dilution of its investment in Costain plc and a gain of the listing of Opus International Consultants Ltd in New Zealand.

By New Straits Times (by Zuraimi Abdullah)