Penang Watch

As pointed out by Penang Watch before both PORR and Monorail projects are privatised-so the contractors need to source the fund themselves. Nothing should be coming out from the Federal govt-except some preliminary studies which should have been done before. Since the PM insist that the 2 projects are shelfed on the ground of costs to the Federal govt-then where are the money going to? To the privatised contractors -possibly because the crony contractors simply are not credit-worthy to make any loan from the banks? The plot has thickened- some MPs should start posing this questions to the Parliament to seek clarification. In this report below the PM even confirmed another nightmare for these `privatised' projects: the costcan be revised midway! So what was the contract for?

PORR, monorail on hold due to cost
Tan Yi Liang

KUALA LUMPUR (July 3, 2008): The Penang Outer Ring Road (PORR) and the Penang Monorail Project have been put on hold due to rapid cost increases, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

Speaking in a press conference after chairing the National Corridor Implementation Authority meeting in his office in Parlimanent House today, he explained that the projects, costing RM2 billion and RM1.5 billion, had to be put on hold pending a review of the "rapidly increasing costs of building materials".

"The development of the projects depend on our financial capabilities. Right now, the costs of building materials are increasing very rapidly. Therefore, we have to think it through thoroughly before going ahead with the project," he said.

He feared the projects would be subject to additional costs halfway through.

"I do not want the projects to be started, to only find out halfway that there are additional costs. This is already happening in other projects," he said.

"There have been letters received from building contractors who were awarded contracts, and who have begun work to find out the costs of needed building materials have increased sharply. They found out that their original allocation is now insufficient to complete the project awarded to them," said Abdullah, who is also Finance Minister.

He said the matter had to be given attention.

"Developers have to be given a chance to work on their projects in a normal manner. Projects that have not been tendered yet have to be reassessed so the costs are realistic," he said.

He said all projects planned might have to be built in phases.

"We might have to allow these projects to be built in phases, so we can prioritise building additions that are needed.

"For example, when building a secondary school, we can decide that a sports centre with a swimming pool is not needed right now, and we can prioritise the building of classrooms," said Abdullah.

"We have to see how they can be divided into phases, and see which phase we have to do first, and postpone the rest."

Both projects had been deferred by the Economic Planning Unit ( EPU) of the Prime Minister’s Department on June 26 on the rationale that the government would focus on projects that were defined as "people centred" under the 9th Malaysia Plan.

EPU director general Dr Sulaiman Mahbob said after the tabling of the Mid-Term Review of the 9MP in Parliament last week that the PORR and the Penang Monorail Project were "among many projects" shelved.