By Sharina Ahmad
JUST like Sarawak’s Pan Borneo Highway project, the high cost for the Penang Transport Master Plan (PTMP) needs to be reviewed accordingly if there are reasonable grounds to do so, says Sunway University Business School Economics Professor Dr Yeah Kim Leng.
“However, the critical difference with regards to PTMP is that it was awarded on an open tender basis in contrast to Pan Borneo’s negotiated bid with the appointed project delivery partner (PDP),” Yeah tells FocusM.
“It will be costly as well as damaging to the government’s reputation if contracts awarded through open bidding are rescinded without adequate compensation. It is likely that the high compensation cost will deter the government from annulling the PTMP agreement,” he reasoned.
According to news reports on Feb 6, the government has saved some RM3.1 bil or 14% of the total cost of the Sarawak portion of the Pan-Borneo Highway project through a new project funding agreement.
Finance Minister Lim Guan Eng was quoted as saying that 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 bil from RM21.857 bil.
According to Penang Forum coordinator Khoo Salma Nasution, PDP is not good procurement practice.
“This is a case of Penang exceptionalism… land swap deals elsewhere in the country will be investigated, but land swap deal in Penang, no further action.
“PDP in another state, disadvantageous for the government. But in Penang, they are planning to do it with federal guaranteed sukuk bonds!” she tells FocusM.
PTMP’s initial cost was RM27 bil and it has ballooned to an estimated RM46 bil for now.
SRS Consortium is a 60:20:20 joint venture comprising Gamuda Bhd and Penang-based companies Loh Phoy Yen Holdings Sdn Bhd and Ideal Property Development Sdn Bhd.
According to Salma, political secretary to the Finance Minister, Tony Pua, had criticised the basis of the PDP fee for the Kuala Lumpur Mass Rapid Transit (MRT) project in 2012. The PDP fee is a recipe for inflated project cost, he had said.
“I couldn’t agree with him more. Much of his argument applies to the Penang PDP fee as well – but you won’t hear Penang state government leaders echoing what he said back then,” she added.
In a news report dated Aug 28, 2018, Pua said the PDP contract was awarded with no open or competitive tender, the structure of the agreement is such that the overall cost of the project is incentivised to be inflated.
For example, if there are five bids to construct the MRT terminal at Taman Tun Dr Ismail (TTDI), there is greater incentive for the PDP to recommend the bid with the highest or higher prices, instead of the lower-priced ones.
The simple reason is that the higher priced ones will translate into a higher fee for the PDP given the fixed 6% structure. – Jan 7, 2020
