Penang Watch

Is it possible for a contract price of a construction to go up after the contract is signed? Apparently it is `yes' in Malaysia-in the case of the 2nd Penang Bridge. It seems to suggest an incredible level of `protection' given to the builder UEM, paradoxically a GLC. While money goes arounddifferent hands of the government the beneficiaries are switched...  

Second Penang Bridge now to cost RM4.58b
PENANG, July 3 — The cost of the Second Penang Bridge project has escalated to RM4.58 billion from the original cost of RM3.6 billion, according to UEM Group Bhd.

Its managing director and chief executive officer Datuk Ahmad Pardas Senin said the increase reflected the escalation of costs due to rising prices of oil and building materials.

"I would like to clarify here that the original costing for the whole project is RM3.6 billion and not RM2.7 billion. The RM2.7 billion 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 yesterday.

He said construction cost of the bridge, linking the island from Batu Maung to Batu Kawan on the mainland, was RM4.3 billion.

"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 building materials drops, the construction cost may go down as well," he said.

He said preliminary work on the construction of the bridge had started and the project was on track to be completed as originally planned by 2011.

"We expect the main construction to take off early next year," he said.

On the progress of work, he said the casting yard in Batu Kawan was in advanced stage of completion and would be used to produce box girders, the critical component of the bridge.

"Work so far has made significant progress, with soil investigation, pile testing and construction of the Batu Kawan site office completed," he said.

UEM Group, the holding company of UEM Builders, was awarded by the government the contract for construction of the 24-kilometre bridge connecting Penang to the mainland.

The project is being undertaken by UEM Builders in a joint venture with China Harbour Engineering Company Ltd.

Asked whether the company was facing problems on land acquisition in Batu Kawan, Ahmad Pardas said: "Land acquisition is not a problem. It is just a process that needs to be undertaken."

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 expected to serve as a strong growth catalyst for the Northern Corridor development.

Ahmad Pardas said the bridge was set to offer spillover socio-economic development opportunities to communities within its immediate vicinity and surrounding areas during the construction stage and upon its completion. — Bernama