PENANG's SECOND LINK Update!

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2nd Penang Bridge
More ships for sea-deepening job
By Marina Emmanuel Published: 2008/04/30, BusinessTimes

CHINA Harbour Engineering Company Ltd (CHEC), the main contractor of the second Penang bridge, is awaiting the arrival of 18 more ships to complete its sea-deepening work for the project.

It is learnt that the Beijing-based company, which has already brought in two dredging ships, is waiting for permits from local authorities to bring in the remaining vessels.

"It is likely to take CHEC four months to complete the deepening work, and the company remains confident that it can finish its 17km sea-portion of the bridge on schedule," industry sources told Business Times.

CHEC, which set up an office in Penang last year, has so far deployed 200 of its staff for the project.

The 24km second Penang bridge (of which 17km will be on water) linking Penang island and Seberang Prai, is the largest overseas project for CHEC in terms of value.

Upon completion in 2011, the bridge is set to be the longest in Southeast Asia.

State-owned CHEC is a Fortune 500 company, with a global footprint via 15 companies and 20 overseas resident offices. It is a unit of China Communications Construction Co Ltd, China's top port builder.

UEM Construction Sdn Bhd has named CHEC as its main contractor for the bridge project and a consortium, named CHEC-UEMC, has been formed.

CHEC holds 51 per cent of the venture while UEM has the rest.

Meanwhile, Prime Minister Datuk Seri Abdullah Ahmad Badawi, who is also Finance Minister, is expected to chair a special meeting this week on the bridge project.

It is learnt that Abdullah, together with Tan Sri Zaini Omar, who heads a taskforce on the project, is expected to sit down with the project's stakeholders which include Minister of Finance officials, UEM and CHEC to finalise cost and design issues.

Sources say that the government will allow no variation orders to the ceiling price of the bridge which has been set at RM4.3 billion.

"CHEC has told the government that its 17km sea portion will cost RM2.3 billion and expressed its willingness to have independent parties verify its costing for the sea portion," they added.

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Penang's Second Bridge Preliminary Work Almost Completed
May 17, 2008 16:18 PM

PENANG, May 16 (Bernama) -- Preliminary work on Penang's second bridge, linking Batu Maung on the island to Batu Kawan on the mainland, is almost completed, said Chief Minister Lim Guan Eng today.

He said there was a lot of preliminary work like surveying, site clearing, soil investigation, designing, testing and dredging to be done before the main construction of the 26-kilometre bridge could take off.

"Most of the preliminary work is near completion. The only one that is not actually completed is the dredging work which is now 34 per cent completed," he told a news conference here Saturday.

He said the state government hoped that the main construction could take off as soon as possible.

"We hope that the federal government can speed up because investors are also very interested to know about the pace of the construction," he said.

Last month, Prime Minister Datuk Seri Abdullah Ahmad Badawi said the proposed bridge, initially targeted for completion in 2011 on a RM3 billion budget, was experiencing delays due to escalating costs and problems in the design and land acquisition.

-- BERNAMA

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Second Penang bridge on track, cost may rise
By Chong Pooi Koon Published: 2008/06/10, BusinessTimes

The government has approved an increase in construction cost for the bridge but the mechanism and quantum are still to be worked out, says UEM Builders

UEM BUILDERS Bhd, a contractor for the second Penang bridge, said the project is on track for completion in 2011 and that the government has agreed in principle on a price increase as the cost of raw materials surges.

"The project value is at RM4.3 billion now. There will be a mechanism to take into consideration price rise and a formula will be worked out," managing director Datuk Ridza Abdoh Salleh said after a shareholder meeting in Kuala Lumpur yesterday.

In general, he said, contractors should be allowed to raise project costs as the recent sharp jump in building material prices was far beyond any contractor's projection.

While the government said that it may stop certain mega projects in favour of more people-centric programmes, Ridza is positive that the project to build a second link from the mainland to Penang island will continue.

"If you read further on the Second Finance Minister's statement, he said that the Penang bridge may not be affected. We'd like to look at this positively," Ridza said.

He said the company has committed over RM200 million on the project and have spent RM50 million so far.

"As far as we are concerned, the preliminary work is going on. Some 70 per cent to 80 per cent of the land has been cleared and we have also done the advanced soil investigation," he said.

UEM Builders' current order book stands at RM4.8 billion, 35 per cent of which is from overseas. Chairman Datuk Abdul Rahim Abu Bakar said it is aiming for a balanced earnings mix to cut reliance on domestic projects.

He said the company hopes to increase its activities in India and the Middle East while it pursues new construction and infrastructure projects in Singapore, Indonesia and Papua New Guinea.

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State seeks answers to rocketing cost of bridge
Friday June 13, 2008
By ANDREA FILMER, TheStar


GEORGE TOWN: The cost of the second Penang bridge has ballooned from RM2.7bil to RM4.5bil within a year and the Penang Government wants an explanation.

Chief Minister Lim Guan Eng said there was no reason for such a huge increase as the official inflation rate in 2007 was 2.3%.

“The Federal Government says there is a 2% inflation rate but they have allowed a 60% increase of about RM1.6bil for the second bridge.

“If the inflation rate is 2%, then the cost of the bridge should only rise by 2%, and if inflation is truly at 60%, then our salaries should be raised 60%,” Lim said after opening a building exhibition at the Penang Interna-tional Sports Arena.

He said the Federal Government had to explain the steep increase in costs as Penangites would eventually have to bear the expense through toll rates.

When asked about the rising cost of raw materials such as steel, Lim said the producer price inflation was set at about 5% last year.

“The rise in the price of raw materials would also have been included in the inflation rate.”

On talk of the Federal Govern-ment opening up the second Penang bridge project for tender, Lim said he supported the move as it produced the best and most competitive price.

“If the Federal Government plans to review the project and introduce open tender, the state is 100% behind the move,” he said.

The project was awarded last year to UEM World Bhd which formed a joint venture with China Harbour Engineering Co Ltd (CHEC) to build the second bridge.

Asked whether the state was planning to follow in the footsteps of Selangor by distributing free water, Lim said the state had no plans to do so as the Penang water rates were among the lowest in the country.

“When things are cheap, people tend to waste and Penang has one of the highest water consumption rates in the country,” he said, adding however, that there were no plans to raise state water rates for the next two years.

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Penang wants seat on 2nd bridge tender board
By Regina William, 13 Jun 2008 2:24 PM
THEEDGEDAILY

PENANG: The Penang state government should be allowed to sit on the open tender board if the federal goverment decided to call for an open tender for the toll collection and management of the Second Penang Bridge, said Chief Minister Lim Guan Eng.

It would be a step in the right direction as Penangites should be represented in the decision-making process, he told The Edge Financial Daily .
Lim was responding to a Malaysian Insider report that the governmet has decided against awarding the concession to manage and collect toll to UEM Group Bhd.

UEM is jointly constructing the bridge, due for completion in 2011, with China Harbour Engineering Company (CHEC).

According to the report, the management and collection of toll for the second crossing would be decided through open tender, and the winning party would have to share revenue with the government. The decision was said to have been reached at a high-level meeting among Finance Ministry and Economic Planning Unit officials on Wednesday.

“The Penang state government should have a say in this. It is only fair since mostly Penangites will be the ones paying the toll.

“The people must know what are the conditions for the open tender, and it must be a proper tender process, not one where “selected” parties are awarded the tender. It must be done in a transparent manner, only then will the people be convinced of the government’s transparency in this tender process,” Lim said.

He also called on the federal government to explain why the cost of the second bridge escalated from RM2.7 billion in 2007 to RM4.3 billion this year.

Lim said an increase of RM1.6 billion in a year was “frightening”.

He said while the government maintained that last year’s inflation rate was 2.3%, he could not understand why the cost of the bridge went up by 60%.

“On one hand, the government says the inflation rate is 2%, but allows the increase of costs for the bridge by 60%. Then rightfully, inflation percentage would also be 60% and the government should increase salaries by 60% as well,” Lim added.

Saying that the high cost of building the bridge would eventually tax Penangites, Lim said the government should also reconsider an open tender for the construction of the bridge or use 5% of Petronas profits to build the bridge.

“The bridge project has to proceed but the government must explain why it is so expensive. There must be cost rationalisation, and an open tender to obtain the most competitive price would be the best way to do this,” he said.

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Minister affirms UEM role in second Penang bridge
By Roziana Hamsawi Published: 2008/06/20, BusinessTimes

CONSTRUCTION firm UEM Builders Bhd is still the contractor for the second Penang bridge project, says Second Finance Minister Tan Sri Nor Mohamed Yakcop.

However, he declined to comment on reports that the company would not be managing and collecting toll.

"The Economic Planning Unit will discuss and issue a statement in due course.

"On the structure of constructing the bridge, at this point in time certainly, UEM is on as the contractor," he said yesterday.

Nor Mohamed was speaking to reporters after delivering his keynote address at the Malaysia Islamic Capital Market Conference 2008 in Kuala Lumpur.

An online news report had quoted unnamed government sources as saying that the toll concession portion of the project would be decided through open tender and the winning party would have to share the revenue with the government.

The report added that the move could save the government up to RM18 billion over 45 years and result in greater flexibility in levying toll charges.

UEM, meanwhile, had said recently that the 24km bridge was expected to be completed by 2011 and that initial construction work had begun.

It also said that the government had approved an increase in the construction cost above the original estimate of RM4.3 billion due to rising prices of oil and building materials.[/QUOTE]

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UEM to sign new 2nd Penang bridge pact
By Zuraimi Abdullah Published: 2008/06/26, BusinessTimes

The new deal will cap the project's total cost at RM4.3 billion and call for an open tender of the bridge's toll concession

UEM Group, together with its Chinese partner, expects to sign a new agreement to build the second Penang bridge next month, its top executives said.

The new contract will cap the project's total cost at RM4.3 billion but the UEM-China Harbour Engineering Co Ltd consortium can claim extra expenses from fluctuating material costs, they said.

The new deal follows the government's decision to allow for an open tender of the bridge's toll concession, amid rising costs due to soaring energy and commodity prices worldwide. The move reversed the original plan to let UEM, via subsidiary UEM Builders Bhd, manage the concession once the bridge is completed.

"The (new) contract agreement has been finalised and we hope to sign it soon," group chairman Tan Sri Dr Ahmad Tajuddin Ali said.

Tajuddin and managing director Datuk Ahmad Pardas Senin said the group was managing the construction cost partly through forward- and pre-buying of key materials like steel and cement.

They said the group was well poised to bid for the toll concession when the time comes. UEM is bullish about its chances, given its experience and expertise in highway and toll operation and maintenance locally and abroad.

Tajuddin and Ahmad Pardas were speaking at a press conference after UEM World Bhd's annual general meeting in Kuala Lumpur yesterday.

Ahmad Pardas, who is also group chief executive officer, said the bridge's design had been tweaked with some "esthetic changes" but the alignment remains as in the original plan.

Tajuddin, meanwhile, said the listing of the group's property arm, UEM Land Bhd, is expected to take place in early November. The listing is part of the UEM group's restructuring announced in February this year.

The planned capital repayment to UEM group shareholders, another key component of the restructuring, should be made by the third quarter, he added.

On revenue growth this year, Ahmad Pardas said the target set under its KPI (key performance indicator) is achievable despite a more challenging business and economic environment.

He added that construction, engineering, healthcare and property divisions would continue to contribute significantly to the company's performance.

UEM announced recently a 13 per cent growth each in revenue and return on equity under its KPI targets for the year ending December 2008.

Last year, the group's revenue grew 46 per cent to nearly RM7 billion, although the growth is still short of its targeted 65 per cent under its KPI. Group net profit rose fourfold to RM939.2 million from RM194.9 million previously.

The performance was largely due to major land sales in Nusajaya in Johor, the benefits from the dilution of its investment in Costain plc and a gain of the listing of Opus International Consultants Ltd in New Zealand.

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Guan Eng Wants Federal Govt To Quickly Approve Penang Second Link
June 28, 2008 19:06 PM

PENANG, June 28 (Bernama) -- Chief Minister Lim Guan Eng has asked the federal government not to delay approval for the Penang second bridge project.

He said the federal government had not given the nod for the final agreement for the RM4.3 billion bridge though preliminary work had started.

"We want construction work to start soon so that construction cost will not escalate further and make the bridge more expensive," he told reporters after meeting China Harbour Engineering Co Ltd president Sun Ziyu and managing director Lu Yan.

The 24km bridge is joint-venture between UEM Builders Bhd and China Harbour Engineering.

Guan Eng, however, agreed with the government's decision for the bridge's toll rates be decided via open tender.

"How many people using the bridge will determine how fast we can recover back the construction cost," he said, adding that it would also depend on the toll charges collected for vehicles.

Guan Eng said he expected the bridge linking Batu Maung on the island to Batu Kawan on the mainland to be completed by end of 2011.

On another issue, Guan Eng was furious over the remarks by his predecessor Tan Sri Dr Koh Tsu Koon for accusing him of sending confusing signals to the federal government about what the state government want for Penang.

Describing Koh's comments as "insensible", he said: "Koh should not blame it on me for the Penang monorail and Penang Outer Ring Road to be put on hold as I am not the one who made the decision."

He said Prime Minister Datuk Seri Abdullah Ahmad Badawi and Second Finance Minister Tan Sri Nor Mohamed Yakcop had given their assurance the federal government would continue to implement mega projects planned in the state.

"I never said the Pakatan Rakyat-led states would not want these projects to continue. Instead of blaming us, Koh should advise Abdullah as he is the one making the decision," he added.

-- BERNAMA

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SECOND PENANG BRIDGE ON TRACK FOR COMPLETION BY 2011

Bernama - Thursday, July 3

PENANG, July 2 (Bernama) -- Preliminary work on the construction of the RM4.58 billion second Penang bridge has started and it is on track to be completed as originally planned by 2011.

"We expect the main construction will take off early next year," said UEM Group Bhd's managing director and chief executive officer Datuk Ahmad Pardas Senin.

He said RM200 million had been committed for the construction cost of 26-kilometre bridge.

Ahmad Pardas said the casting yard located in Batu Kawan was in advanced stage of completion and would be used to produce box girders, the critical component of the bridge.

He said progress had been made in terms of completing soil investigation, pile testing and construction of Batu Kawan site office.

Originally, the bridge was estimated to cost RM3.6 bilion but this was then revised upward to reflect the escalation of costs due to rising prices of oil and building materials, Ahmad Pardas said.

"I would like to clarify here that the original costing for the whole project is RM3.6 billion and not RM2.7 billion, which was actually referred to the cost of building the 17-kilometre bridge span over water," he told reporters during a media visit to the Batu Kawan site here today.

"The price of building materials today is higher. The real cost depends on the respective building material costs. In the future, if the price of the building materials drops, the cost of construction may go down as well," he said.

The project is being undertaken by UEM Builders, a member of the UEM Group, under a joint venture with China Harbour Engineering Company Ltd.

Identified as one of the major infrastructural projects under the Ninth Malaysia Plan for the northern region, the bridge is slated to become a regional icon and serve as a strong growth catalyst for the Northern Corridor development. -- BERNAMA

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2nd Penang bridge's cost may breach RM5b
By Marina Emmanuel Published: 2008/07/03, BusinessTimes

The total cost has escalated to RM4.59 billion from RM3.6 billion, says UEM Group, adding that it can pass on extra costs if the prices of raw materials go up further

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.

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Bridge project right on schedule
TheStar



Ongoing project: A general view of the casting yard
for the second Penang bridge in Batu Kawan Wednesday.

NIBONG TEBAL: The second Penang bridge will be completed in 2011 as scheduled, and the cost will be RM4.5bil.

UEM Group Berhad managing director and chief executive officer Ahmad Pardas Senin said the commonly quoted figure of RM3.6bil was only for the cost of the construction of the bridge over water.

This did not take into account the RM900mil needed to construct the 7km expressway linking it to the North South Expressway.

He explained that there was a price fluctuation clause to account for price changes in building materials and it did not necessarily mean that the final cost would be higher than the estimate because the clause took into consideration prices of building materials going up or down.

Ahmad Pardas said he believed that without the fluctuation clause, no organisation would be willing to start any construction because it would definitely be running at a loss.

“We are committed to completing the job by the end of 2011,” he told a press conference at the project site office here, after a site visit with the media yesterday.

He said the cost of building the bridge now stood at RM4.585bil, including RM285mil in development cost.

“The price of steel has increased by 60% and while fuel went up by 40%. The cost of building the bridge has only gone up by 10.4%,” he said.

Chief Minister Lim Guan Eng had last month asked the Federal Government to explain why the cost of the second Penang bridge project had ballooned from RM2.7bil to RM4.5bil within a year, saying that an explanation was necessary because Penangites would eventually have to bear the expense through toll rates.

Ahmad Pardas clarified that the original cost for the whole project was RM3.6bil and not RM2.7bil as reported in the media.

He said work to build the bridge had not stopped since Prime Minister Datuk Seri Abdullah Ahmad Badawi officiated at the ground-breaking ceremony in November 2006.

The project is undertaken by UEM and Chinese Harbour Engineering Company, which holds a 51% stake and the rest by UEM.

Ahmad Pardas said UEM would spend RM57mil to acquire about 113ha of land belonging to individuals and the Penang Development Corporation for the project.

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Penang 2nd bridge project already generating spin-offs
By Lokman Mansor Published: 2008/07/25, BusinessTimes


THE Penang Second Crossing Bridge (P2X) project, which is scheduled to open to the public by 2011, has already started generating value-added and positive spin-offs, UEM Group Bhd managing director and chief executive officer Datuk Ahmad Pardas Senin said.

He said work had actually commenced from the day Prime Minister Datuk Seri Abdullah Ahmad Badawi laid the first piling during the ground breaking ceremony in November 2006, and had not stopped since then.

"To date, we have extended opportunities to more than 40 subcontractors to participate in various preparatory works at this early phase. Some 30 consultants have already started working on the project.

"As the project progresses forward, we will definitely engage more local contractors to participate in this prestigious project," he said in a statement.

Pardas said P2X will increase job opportunities for locals, as well as contribute towards upgrading knowledge and skills of students in local tertiary institutions so that they can be hired and given choice incentives to work in the high-tech project.

UEM signed memorandums of understanding with the Ministry of Higher Education to assist in upgrading community colleges, especially in Penang - as a major initiative to develop knowledge workers and also develop human capital.

The group also provides training and guidance to local vendors so that they will have the required knowledge and skills to undertake projects of such magnitude.

"Via our UEM Young Executive Scheme (UEM YES), 200 young engineers and technical professionals will be selected to work on this project," Pardas added.

He said the group has outlined many corporate social responsibility initiatives including partnerships with local schools. So far it has adopted eight schools in Penang under the Pintar Programme, six via UEM Builders and two via Time Engineering.

UEM Group has already committed more than RM200 million for the P2X project. The total cost of the project has escalated to RM4.5 billion due to the increasing price of materials and fuel. Construction on sea is expected to start in the fourth quarter of 2008.

"We have made significant progress by completing soil investigation (on land and sea), pile testing and the construction of the Batu Kawan site office.

"The casting yard, located in Batu Kawan, is in the advanced stage of completion and will be used to produce segment box girders which is the most critical component of the bridge," he said.

Pardas said the project is one of the main catalysts for the development of the Northern Corridor Economic Region that encompasses Perlis, Kedah, Penang and Northern Perak.

"It will help spur socio-economic activities, contribute towards bridging island and mainland communities, and of course solve traffic congestion on the existing Penang Bridge," he said.

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UEM Builders seeks govt clarification on Penang bridge work scope
06-08-2008: by Mohd Yuzam Yusa THEEDGEDAILY

KUALA LUMPUR: UEM Builders Bhd said that the scope of work awarded to it by Jambatan Kedua Sdn Bhd (JKPP), the company that owns the Second Penang Bridge, over-lapped with the scope of work being negotiated by its parent company, UEM Group Bhd, with the government.

In a statement to Bursa yesterday, UEM Builders said that its parent company UEM Group Bhd (UEMG) was in negotiations with the government pursuant to an earlier decision made by the government to award the project to UEM group on a concession (build-operate-transfer) basis.

“We understand from UEM Group that the government has not withdrawn its instructions to them (UEM Group). As this matter may result in substantive contractual consequences, we will seek clarification from the government. In the meantime, we are not in the position to comment further on this subject but will stand guided by the government’s decision,” said UEM Builders.

Last year, the government awarded the Second Penang Bridge project to UEM Group on a concession basis. UEM group subsequently awarded the construction of the job to a joint-venture of Chinese Harbour Construction Company (CHEC) and UEM Builders with the former holding 51%. Both parties were supposed to firm up a shareholders’ agreement but could not do so as they did not see eye-to-eye on certain matters pertaining to the apportionment of cost.

The Edge Weekly reported that the government has established JKPP to award the constracts direct to the companies and oversee the construction. It was reported that CHEC was awarded a RM2.3 billion job while UEM Builders got an award for a RM1.3 billion job, much lower than the estimated RM2.2 billion it was supposed to get.

UEM Builders confirmed that had it received a letter from JKPP on July 30 informing that it had taken over the duties of the Special Task Force and offered certain works on the Second Penang Crossing Bridge project to UEM Builders.

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UEM Builders H1 profit up
Published: 2008/08/09 BusinessTimes

UEM Builders Bhd’s pre-tax profit for the six months ended June 30, 2008 rose to RM57.19 million from RM56.7 million in the same period last year.

Revenue, however, fell to RM1.12 billion from RM1.37 billion in the previous year’s corresponding period.

In a statement in Kuala Lumpur yesterday, managing director, Datuk Ridza Abdoh Salleh, said the higher pre-tax profit was achieved despite a challenging business condition of rising fuel and material costs and a reduction in revenue.

“We will endeavour to work towards our targets in a challenging business environment that has affected all contractors including our group. The impact on our group has been mitigated by contractual measures taken previously to reduce the burden of price escalations,” he said.

He said the group was positive of its continuing involvement in the Penang Second Crossing Bridge project.

“As stated previously, our group has committed more than RM200 million on the project to ensure its timely completion and this commitment is reflected in the near completion of the casting yard plant for the segmental box girders to be used on the bridge structure and other enabling works.

“The casting yard is the launching pad for the project. With the plant 73 per cent completed, we believe we have contributed significantly to enable the project to progress smoothly to the next stage of construction,” he said. — Bernama

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UEM presses on with bridge job
19-08-2008: by Yong Yen Nie & Sakinah Latif THEEDGEDAILY

KUALA LUMPUR: Despite the government having announced that the construction of the Second Penang Bridge is to be supervised by a Special-Purpose Vehicle (SPV) under the Ministry of Finance (MoF), UEM Group Bhd said that it would proceed with the construction of the bridge on a concession basis.

UEM Group managing director Datuk Ahmad Pardas Senin said the group has yet to receive an official notification from the government on the rescission of the agreement signed in November 2006.

"We have already run ahead with the construction work, as we have agreed to complete the project by 2011 (and) the group has incurred more than RM200 million for the construction work to date," he told a media briefing after UEM World Bhd’s EGM here yesterday.

According to Ahmad Pardas, the expenditure incurred was mainly for yard casting, that is preparing the ground work for the project.

However, he said as the Second Penang Bridge was still a federal government project, the government was free to rescind the agreement it had with UEM Group.

In June, Second Finance Minister Tan Sri Nor Mohamed Yakcop confirmed reports that the concession element of the bridge has been detached from the construction side.

Subsequently, the government established the SPV, Jambatan Kedua Pulau Pinang Sdn Bhd (JKPP), to undertake the project. The SPV awarded jobs to the two main contractors of the bridge - UEM Builders Bhd and China Harbour Engineering Co Ltd (CHEC).

Ahmad Pardas said UEM Group was not in a position to accept or reject the recent offer from JKPP as the letter of offer was addressed to UEM Builders Bhd. "It’s their (UEM Builders) position to reply to JKPP," he said.

He stressed that UEM Group did not want to speculate whether it should seek compensation if its agreement with the government lapsed, until it had received concrete details on the changes in the agreement.

On Aug 4, The Edge weekly reported that the government had set up JKPP to award the contracts direct to the companies and oversee the construction. It was reported that CHEC was awarded a RM2.3 billion job while UEM Builders got an award for a RM1.3 billion job, much lower than the estimated RM2.2 billion it was supposed to get.

In a reply to a query by Bursa Malaysia on Aug 5, UEM Builders confirmed that it had received a letter from JKPP on July 30 informing it that the SPV formed by the government had taken over the duties of the Special Task Force and offered certain works on the bridge to the company.

However, it said it would seek clarification from the government on the matter as the scope of work awarded to it by JKPP overlapped with that being negotiated by its parent company, UEM Group Bhd, with the government.

The government had, in November 2006, awarded UEM Group a contract to construct and manage the Second Penang Bridge for RM2.7 billion. UEM Group subsequently awarded the construction job to a joint venture (JV) of CHEC and UEM Builders, with the former holding 51% in the JV.

However, by April this year, the cost had ballooned to some RM4.3 billion due to rising raw material prices.

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WORK ON 2ND PENANG BRIDGE IS STILL GOING ON, SAYS UEM
Bernama - Tuesday, August 19

KUALA LUMPUR, Aug 18 (Bernama) – Construction works on the Second Penang Bridge are still going on, says the UEM Group, adding that two years of work worth RM200 million has already been done.

“The construction work continues. So far, at UEM Group Bhd, there has been no specific...formal instruction to do otherwise,” said UEM Group managing director, Datuk Ahmad Pardas Senin to reporters after UEM World Bhd's extraordinary general meeting here today.

“UEM Builders still have a contract with us,” he added when was asked on the progress of the project.

Some confusion had set in when UEM Builders Bhd received a letter from Jambatan Kedua Sdn Bhd (JKPP), the company that owns the Second Penang Bridge, on July 30, informing that it had taken over the duties of the Special Task Force and offered certain works on the project to UEM Builders.

The government, however, had awarded the project to UEM Group last year on a concession basis whereby UEM Group subsequently awarded the construction of the job to a joint venture of Chinese Harbour Construction Company (CHEC) and UEM Builders with the former holding 51 percent.

“UEM Group did not receive the letter. That letter was sent to UEM Builders and UEM Builders have already replied in a query to Bursa Malaysia,” he said.

UEM Builders, meanwhile, in filing to Bursa Malaysia on Aug 6 said the scope of work awarded to it by Jambatan Kedua Sdn Bhd was over-lapping with the scope of work being negotiated by its parent company, UEM Group, with the government.

UEM Builders said UEM Group was in negotiations with the government pursuant to an earlier decision made by the government to award the project to UEM group on a concession (build-operate-transfer) basis.

Asked if UEM Group would ask for compensation if the government totally revoked the project, Ahmad Pardas said, “I don’t want to speculate."

“At the end of the day it is a government project. We will always respect. The government has full right to which way they want the project to be." He added that the group was grateful to have been chosen as a party to undertake the project.

The project is expected to be completed in 2011.

“We have done two years work. If we waited until everything is in place, nothing could have been done. We would not have been able to fulfill our undertaking by 2011,” Ahmad Pardas said.

He also added that if the company is able to progress with all things in place, it would be able to keep the momentum.

Elsewhere, Ahmad Pardas said the discussion on adjustment of toll rates nationwide was ongoing.

“We will always work and support whatever the government wants to do," he said, adding that nevertheless there would be issues to be addressed if there are to be any changes. -- BERNAMA

[nazrey]

UEM yet to hear from govt on Penang Bridge
05-08-2008: THEEDGEDAILY

PETALING JAYA: UEM Builders Bhd is awaiting word from the government on the developments pertaining to the Second Penang Bridge, said UEM Group chief executive Datuk Ahmad Pardas Senin.

“We are unable to make any comments now. We are still waiting for statements from the government,” he told The Edge Financial Daily.

He was asked to respond to questions on the possibility of the government forming a special purpose vehicle to take over the bridge project and UEM Builder’s contract sum being slashed by RM900 million.

Last Saturday, The Edge weekly reported that the government has formed a special purpose vehicle, Jambatan Kedua Pulau Pinang Sdn Bhd (JKPP) to undertake the project as UEM Builders and China Harbour Engineering Co (CHEC) — the two main contractors for the job — have so far failed to firm up their shareholders agreement.

It was reported that JKPP had also awarded CHEC a contract of about RM2.3 billion and UEM Builder another contract worth RM1.3 billion.

Affin Investment Research said if the news was true, it would have negative impact on UEM Builders, especially when the project comes with a materials costs fluctuation clause to protect UEM Builders’ construction margin.

“On a broader perspective, the loss of contracts to well-connected companies, if true, might cast more negative light on GLCs (government-linked companies),” it added.

Meanwhile, Regina William reports that the state government was in the dark over the latest developments for the Second Penang Bridge project.

“We are not aware of what is happening and what we know is through the report,” said Chief Minister Lim Guan Eng. “Since this is federal government project, it is up to the federal government to decide on the mechanism. But if there is a request, we will assist in coordinating and cooperating with the relevant agencies to speed up whatever needs to be implemented.”

[nazrey]

No toll deal for UEM at new Penang bridge
Published: 2008/08/05

UEM Builders Bhd, the main builder of a second bridge in Penang, won't get the contract to collect road tolls at the site, according to Second Finance Minister Tan Sri Nor Mohamed Yakcop yesterday.

"The government decided about a month ago to set up a special-purpose vehicle to collect the tolls," Nor Mohamed told reporters in Kuala Lumpur yesterday. Under a new contract, the developers will just build the bridge.

Penang is home to manufacturers including Dell Inc and needs an additional bridge to relieve traffic congestion. China Harbour Engineering Co will work with UEM Builders to build the 23km link from the mainland to the island after the Export-Import Bank of China agreed to lend Malaysia US$800 million (RM2.62 billion) for the project, the Chinese company said last year.

UEM said in June the government had agreed to raise the cost of the RM4.3 billion project on higher raw material prices. The bridge is due for completion in 2011, UEM said. - Bloomberg

[nazrey]

UEM given ultimatum on second Penang bridge
Tuesday September 16, 2008 MYT 7:45:20 PM By TAN SIN CHOW TheStar

GEORGE TOWN: Take it or leave it! That’s the ultimatum given to UEM Builders Bhd by Jambatan Kedua Sdn Bhd (JKSB), a special purpose vehicle (SPV) established by the Government to supervise and fast track the second Penang bridge project.

JKSB managing director Tan Sri Zaini Omar said UEM had been given a two-week grace period, effective from Monday, to accept the terms for the construction of the project.

Under the terms, a RM1.3bil contract will be awarded to UEM, one of the three contractors for the project.

“That’s the offer, and if they do not accept, we have to look at other means.

“We will call for a restricted tender if UEM does not accept our offer,” he said at the briefing on the latest progress of the project at Komtar here on Tuesday.

It is learnt that UEM did not accept the offer as the contract rendered was not financially viable.

On another matter, Zaini said they saved more than RM300mil after re-designing the structure of the bridge.

He said 5% of the work had already started, with dredging being carried out and temporary jetties set up at the Batu Maung site.

“Construction work will be in full swing within two months once details have been finalised with China Harbour Engineering Company Ltd (CHEC) by end of the month,” he said.

The Chinese company is another contractor awarded a RM2.3bil contract to build the sub-structures of the bridge.

It is responsible for the marine work, piling and construction of the main span.

“Any construction carried out below the bridge will be handled by CHEC,” he said, adding that the signing of the agreement is expected to take place by end of October.

A third contractor will be appointed through restricted tender and given a RM750mil contract for works carried out at the land portion of the bridge in Batu Maung and Batu Kawan.

He said the project, which was scheduled to commence in June last year, was behind schedule and is now expected to be completed within 40 months or the end of 2011.

Zaini said the cost was still priced at RM4.3bil but this would depend on the fluctuating prices of fuel, cement and steel, adding that the JKSB might also tender the operation once the bridge is completed.

Zaini said the toll for the second bridge will be the same as the Penang Bridge or even lower.