PDP termination for PBH Sarawak saves RM3.1b

The amount represents 14% of the total financial implications estimated before terminating the agreement, says finance minister

By ASILA JALIL / Pic By RAZAK GHAZALI

THE government is expected to save RM3.1 billion following the termination of the project delivery partner (PDP) agreement for the development of the Sarawak portion of the Pan Borneo Highway (PBH).

Finance Minister Lim Guan Eng said the amount represents 14% of the total financial implications estimated before terminating the agreement.

The estimated financial implications towards the government with the involvement of the PDP company previously was RM21.86 billion, while the new estimated amount after the termination of the agreement will be RM18.85 billion.

“In line with the decision to terminate the PDP agreement, the Ministry of Works issued a PDP agreement termination notice to the PDP company on Sept 20, 2019.

“The execution of the PBH Sarawak project after the termination of the PDP agreement will be done conventionally without the involvement of the PDP company,” Lim said in a press conference in Putrajaya yesterday.

Lim said with the termination of the agreement, the government does not have to pay the PDP fee, which is 5.5% of the construction cost, along with other costs which are reimbursable to the PDP company.

He added that the amount saved will be used for other infrastructure projects in Sarawak if there is no other cost overrun.

Lim said the Cabinet agreed in a meeting on Sept 4 last year that the execution of 11 work packages along the 786.4km of the Sarawak portion will be continued with-out the involvement of the PDP company.

Currently, one work package, which is the WPC01 from Telok Melano to Semantan, was completed on time on Jan 6, 2019.

A mutual termination letter was also signed between the federal government, the Sarawak state government and DanaInfra Nasional Bhd involving the termination of the previous project funding agreement, while a new project funding agreement was signed between the federal government and DanaInfra yesterday.

“A sufficient allocation prepared for the completion of the 11 work packages includes a total of RM5 billion development allocation from the federal government and the remaining funding will be prepared by DanaInfra.

“The continuation of the funding process by DanaInfra includes the termination of the present project funding agreement, which is replaced with a new agreement and was signed today.

“The process involving the project funding agreement is in line with the termination of the PDP agreement which will be effective on Feb 20, 2020,” Lim said yesterday.

Also present at the event was Works Minister Baru Bian who said the signing ceremony showed that the government is committed in its effort to continue the development of the PBH.

“We want to give assurance to the people in Sarawak that we will cooperate with the Sarawak state government via our partner, the Public Works Department Sarawak, which will become the superintending officer to execute this mega project,” he said.

Bian said several challenges are expected to occur in the development of the highway and the ministry foresees struggle in meeting the project’s stipulated deadlines.

“There is a possibility. There might be (delays) but at the same time, we are trying to work on how we can overcome this,” he said.

Meanwhile, Lim added that the country is not facing a recession although the government is evaluating the need to devise an economic stimulus package.

“There is no risk of recession for Malaysia. What we want is to ensure sustainable economic growth,” he said.

He, however, did not comment further on what the package entails and said that an announcement on the matter will be made soon.

The Finance Ministry recently stated that it will gather input from several other ministries, industry players and service providers to prepare an economic stimulus package to offset the impact of the 2019 novel coronavirus.