PUTRAJAYA (Feb 6): The Government has saved some RM3.1 billion or 14% of the total cost of the Sarawak portion of the Pan-Borneo Highway project, thanks to a new project funding agreement.

Finance Minister Lim Guan Eng said the new agreement, which employs the "conventional" method compared with the previous project delivery partner model, has brought down the total cost to RM18.846 billion from RM21.857 billion.

He said the lower cost was due to the removal of a 5.5 percent service fees imposed by the PDPs in the previous agreement.

"The reduction is significant, which we hope to channel back to the Sarawak people if there are no cost overruns," Lim said at a press conference today.

Earlier, Lim, together with Works Minister Baru Bian, witnessed the signing of the new funding agreement between DanaInfra Nasional Bhd and the Federal and Sarawak Governments.

According to Lim, some RM5 billion of the project's total cost will be borne by the Government while the remaining RM11.12 billion will come from DanaInfra.

Established in 2010, DanaInfra is a Government-owned special purpose vehicle set up to finance the mass rapid transit (MRT) projects in the Klang Valley and subsequently the Sarawak portion of the Pan Borneo Highway.

Commenting on the termination of the previous agreement, Lim said the move has allowed the Federal Government to handle the project fully, by issuing tenders and allocation for construction, under the supervision of Government-appointed representatives in the Sarawak Public Works Ministry.

He claimed that the old agreement, entered into during the previous administration, was not formulated based on the national interest and not conducted in a transparent manner.