More companies to be axed from Sarawak’s Pan Borneo Highway project?

This article first appeared in The Edge Malaysia Weekly, on September 16, 2019 - September 22, 2019.
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MORE companies could face the axe in the Sarawak portion of the Pan Borneo Highway project, sources familiar with the matter tell The Edge.

Talk of a new wave of termination comes on the back of the government’s decision earlier this month to remove project delivery partner (PDP) Lebuhraya Borneo Utara Sdn Bhd (LBU) from the development of the 786.41km highway.

“There are likely to be more companies getting the boot — some are linked to LBU [while] others did not perform up to expectations … there are a variety of reasons. The Ministry of Works is disputing the claim made by the PDP (LBU) that overall, the highway is 47% complete,” says a source with knowledge of the situation.

This means that some of the companies that have been awarded the 11 work package contracts (WPCs) may come in for some flak for the delays and even the RM16.12 billion price tag (see table).

“The RM16 billion [price tag] doesn’t include other costs. There is almost RM1 billion in PDP fees, the consultants, designs and there are other heavy costs such as reimbursables,” an executive with knowledge of the matter tells The Edge.

With LBU out of the picture, the Ministry of Works is likely to handle the rest of the construction of the highway in Sarawak.

Maltimur Resources Sdn Bhd controls a 55% stake in LBU while Jalinan Rejang Sdn Bhd holds the remainding 45%. The shareholders of Maltimur Resources are Zaidi Abang Hipni with 40% equity interest, Safuani Abdul Hamid (30%) and Tan Sri Abang Ahmad Urai Datu Abang Mohideen (30%). Jalinan Rejang is 40% controlled by Sharifah Noor Ashikin Sy Aznal, 30% by Mohd Khalil Dan, 20% by Muliana Munir and 10% by Abang Abdul Rahim Abang Ali.

Even though his name does not surface in Maltimur Resources and LBU, news reports have it that both companies are linked to Sarawakian businessman Tan Sri Bustari Yusof, a golfing buddy of former premier Datuk Seri Najib Razak.

Some of the companies that may come under pressure after LBU’s exit are also linked to him. One of them is Konsortium URW Sdn Bhd, a nominated sub-contractor that was awarded a contract in excess of RM2 billion to relocate utilities such as pipes and telecommunications and power cables, among others.

Konsortium URW is wholly owned by Shorefield Sdn Bhd, a company controlled by Bustari. Its directors are Mohamad Nadziff Bustari and Ahmadi Yusoff, the son and brother respectively of the businessman.

Other companies linked to him include Konsortium KPE Sdn Bhd — a 70:30 joint venture between KACC Sdn Bhd and Perbena Emas Sdn Bhd — which was awarded the RM1.82 billion WPC 11 involving the 80km portion between Sg Tagap and Pujut Link Road, near Miri.

KACC is 40.57% controlled by Mohamad Subky Bustari, 25.5% by Siti Yuhaniz Bustari, 18.92% by Jennifer Bermas Jabu and 15% by Robert Lawson Chuat.

Perbena Emas, which is the junior partner, is wholly owned by PE Holdings Sdn Bhd. The major shareholder of PE Holdings is Pan Sarawak Holdings Sdn Bhd, which also controls a 65.26% stake in Bursa Malaysia-listed Pansar Bhd. Pan Sarawak Holdings is the flagship company of the family of the late Tan Sri Tai Sing Chii.

Some of the complaints about Konsortium KPE include the cost of RM22.25 million per kilometre for the building of its portion of the highway.

On a cost per kilometre basis, the company’s portion is the second most costly after WPC 10, which is a 77.2km stretch spanning Bakun to Sg Tagap that is being undertaken by Pekerjaan Piasau Konkerit Sdn Bhd for RM1.73 billion, or RM22.34 million per kilometre.

Pekerjaan Piasau Konkerit is a unit of the diversified Shin Yang Group.

Another Sarawakian giant, Samling Group, secured two packages — WPC 1 and WPC 2. Stretching from Sematan to Sg Moyan Bridge, WPC 2 costs RM2.11 billion and spans 95.4km — the longest of the 11 stretches of the highway project — involving the construction of six interchanges, 22 bridges and nine pedestrian bridges, among others.

The Edge understands that there are significant delays in WPC 2.

According to sources, other WPCs that have been delayed include WPC 3, a 75.2km stretch being undertaken by Zecon Kimlun Consortium Sdn Bhd, which is 70% controlled by Zecon Bhd and 30% by Kimlun Corp Bhd. This stretch links Serian and Pantu and is being built at a cost of RM18.43 million per kilometre, or for RM1.39 billion.

WPC 4, valued at RM1.57 billion and linking Pantu to Btg Skrang, is also said to be behind schedule and is being built by a joint venture between Naim Holdings Bhd and Gamuda Bhd on a 70:30 basis.

Similarly, WPC 7 — which involves the construction of 51km, linking Bintangor and Sg Kua, for RM1.63 billion — is also said to be behind schedule. Undertaking this stretch is HSL DMIA JV Sdn Bhd, a joint venture between Hock Seng Lee Bhd and Dhaya Maju Infrastructure (Asia) Sdn Bhd on a 70:30 basis.

How the Ministry of Works will view these delays remains to be seen.

There is also talk that the services of MMSB Consult Sdn Bhd, a construction management company appointed by LBU, would be terminated, but this was still unclear at press time.

At end-March, Works Minister Baru Bian said the government would not terminate the WPCs even if it decides to replace the mega-project’s PDP arrangement with a turnkey model. However, in the current situation, it seems inevitable that some of them will get the chop.

 

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