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Thursday, July 3, 2008

2nd Penang bridge's cost may breach RM5b

UEM Group Bhd, the main contractor of the second Penang bridge, says the total cost of the project is now RM4.59 billion, but it can even breach RM5 billion if prices of raw materials rise further.

"The costs of these items can only be determined as and when we procure them," managing director Datuk Ahmad Pardas Senin told reporters during a site visit at Batu Kawan on mainland Penang.

The bulk of the cost, or RM3.32 billion, is for the portion of the bridge over water, followed by RM997 million for the portion over land. Another RM285 million is for the design, concept and preliminary works that was agreed with the government.

However, UEM can pass on additional costs if the price of materials like steel, is higher.

"I believe that without the fluctuation clause (in an agreement signed between UEM and the government), no organisation will be willing to start any construction because you will definitely be running at a loss," said Ahmad Pardas.

"I would also like to clarify that the original costing for the whole project is RM3.6 billion and not RM2.7 billion as reported by some media previously.

"The RM2.7 billion was actually referred to the cost of building the 17km-bridge span over water. As the construction of a bridge would also include those built on land, another RM900 million should also be included in the original costing as it was allocated to build expressways, interchange and toll plazas," Ahmad Pardas added.

The 24km second Penang bridge (of which 17km will be on water) will link Penang Island and Seberang Prai.

UEM Construction Sdn Bhd, a subsidiary of UEM Builders Bhd, has named port builder and bridge construction firm China Harbour Engineering Co Ltd as its main contractor.

UEM Group now holds the concession for the first Penang bridge. Under that agreement, UEM could seek compensation if a second bridge was built.

However, Ahmad Pardas declined to say what UEM is planning to do, saying there are many ways to deal with the issue.

UEM Group also yesterday indicated its intention to tender for the concession rights of the second bridge.

"The company has the experience and knowledge as its is currently managing two important crossings which are the Penang Bridge and the Malaysia-Singapore Second Link.

"All these will definitely help justify why UEM Group should be the most suitable party ...," Ahmad Pardas said.

Meanwhile, UEM is set to buy 112ha of land in Batu Kawan and Batu Maung for the project. It is expected to pay a total of RM57 million in compensation to affected parties which include private land owners and Penang Development Corp.

By New Straits Times (by Marina Emmanuel)

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