Second Penang Bridge costs to remain RM4.3b

KUALA LUMPUR: The Second Penang Bridge project will remain at RM4.3 billion despite the fall in oil prices and it is on track to be completed by mid-2012, the Dewan Rakyat was told.

The Deputy Minister in the Prime Minister's Department Datuk S.K. Devamany said on March 3 the contractual cost was fixed at RM4.3 billion while there could be variation in prices for several items.

The contract for the superstructure was awarded to UEM Builders Bhd subject to a final agreement with Jambatan Kedua Sdn Bhd (JKSB).

He added the land highway package would be implemented via an open tender, adding JKSB was preparing the tender documents.

"As of now, there is some delay in the implementation of the project as the contractor involved has not been able to enter the construction site at Batu Kawan," Devamany told the House when answering a question from Lim Guan Eng (DAP - Bagan).

Lim had asked the Prime Minister to state the status of the tenders for the superstructure and the land highway packages in the Second Penang Bridge and whether the cost of the project would be reduced due to the drop in oil prices.

Devamany said the Federal Government would finalise the negotiations with the Penang state government and the would-be affected clam breeders on the compensation.

He expected the contractors to start work early this month once JKSB had compensated the clam breeders for vacating the site.

"Nevertheless, the delay to the work schedule is not worrying as it is not expected to affect the completion date of the Second Penang Bridge by middle of 2012," the deputy minister noted.

According to Devamany (BN - Cameron Highlands), the RM4.3 billion construction cost did not include the RM110 million to reclaim the land, RM100 million to compensate the fish and clam breeders, and development cost of some RM285 million.

He added a special purpose vehicle set up by UEM Group Bhd would finance the project via loans from China ExIm Bank and Bank Pembangunan Malaysia Bhd as well as equity contribution by the UEM Group.

"The loan of US$800 million (RM2.8 billion) from China ExIm was based on a low and irresistible interest rate of 3%. This is far lower that than what was offered by the local capital markets and other financial institutions" he added.

Devamany said the loan from Bank Pembangunan Malaysia was RM1.4 billion while equity contribution by the UEM Group amounted to RM50 million, adding the government would bear the remaining RM260 million in financing.

By The EDGE Malaysia (by Yong Min Wei)