Baru outlines cost-saving of RM2.865 billion on Pan Borneo Highway using conventional method

Baru showing the details of the projected costing between the PDP and conventional methods.

By Geryl Ogilvy

KUCHING, Feb 20: The overall cost of the Sarawak section Pan Borneo Highway project has been reduced by RM2.865 billion using the conventional method compared to RM21.857 billion under the Project Delivery Partner (PDP).

Works Minister Baru Bian said the PDP method incurred construction cost of RM16.488 billion compared to the conventional method, in which the total awarded contracts summed up to RM16.116 billion.

The government has reduced cost by RM372 million in constructions (awarded contracts) following the termination of the PDP, Lebuhraya Borneo Utara Sdn Bhd (LBU), effective today.

“The RM16.488 billion is the total cost of the project construction excluding reimbursable PDP fees, ICE (Independent Consulting Engineer) fees, contingency cost and land acquisition. Once these are put in, the total project PDP project cost capping was at RM21.857 billion.

“After the termination of the LBU contract, the Public Works Department (JKR) conventional project cost is at RM18.992 billion,” he told a press conference after launching the Pan Borneo Highway Sarawak project direction here today.

Baru explained that Finance Minister Lim Guan Eng previously announced RM3.1 billion in reduced cost because he was using the capping figure. However, the RM2.865 billion is the latest (updated figure) following further analysis by the state JKR following the PDP takeover exercise from LBU.

Under the PDP model, the overall cost to implement the Sarawak section Pan Borneo Highway project did not only involve construction costs, but also involved payments to PDP companies including reimbursable payments and PDP payment fees at 5.5 per cent of the construction cost.

Baru revealed details to the reduced figure breakdown, which stated that reimbursable fees under the PDP method was RM2.3 billion compared to RM1.131 billion under the conventional method.

PDP fees incurred (prior novation) was RM907 million. Under the conventional method, the fees were RM400 million. ICE fees incurred (including the three-month transition period) totalled RM143 million under the PDP method, while the conventional method only cost RM70 million.

As for contingency cost (8 per cent of target cost), the PDP method was RM1.319 billion and none for the conventional method. There are no changes to the sum of land acquisition, which remained at RM700 million.

However, the projected costing for the conventional method under consultation fees (post novation) was RM575 million.

Baru expressed confidence that JKR would be able to reduce the cost as the agency continues to analyse project cost in the months to come.

When asked on compensation to be paid to LBU following the termination of its contract, Baru said compensation and claims from LBU will be resolved after the completion of the takeover exercise.

“Any legitimate, lawful and equitable claims that should be paid under the PDP agreement, definitely we will look into. Ministry officers are liaising with LBU on the figure,” he continued.

Following the termination of the PDP, Baru said the new target completion of Pan Borneo Highway Sarawak, based on the latest progress report, is June 2022.

Touching on PDP cost cutting measure, the minister was asked on the situation regarding the Penang Transport Master Plan (PTMP).

He said: “We can’t compare the Pan Borneo Highway Sarawak project, as the figure was proposed by them. The question can be posed to the state government of Penang.

“I don’t know if they (Penang government) have any Saving of Cost or not, that should be answered by them. As for the Pan Borneo Highway Sarawak (project), the Saving of Cost is very clear.”

In 2016, Gamuda Bhd-led SRS Consortium confirmed that the initial cost of RM27 billion for the PTMP has ballooned to an estimated RM46 billion, following additional components added by the Seberang Perai Municipal Council (MPSP).

The RM46 billion included RM16 billion reclamation cost and RM30 billion project cost.

The PTMP, including construction works on the light rail transit, Pan Island Link and Penang South Reclamation projects, is expected to commence in the fourth quarter this year. —DayakDaily