Pahang-Selangor tunnel project sign of improving contract flows

Tuesday May 26, 2009
Analysts: Pahang-Selangor tunnel project sign of improving contract flows
By YVONNE TAN

PETALING JAYA: The construction of the 44.6km tunnel to channel raw water from Pahang to Selangor, which will start on June 1, is a significant signal that contract flows are improving, analysts said. “We think this is a good development and it should trigger the award of contracts for the remaining packages in the entire water transfer project,” AmResearch senior analyst Mak Hoy Ken said. “I think we can all heave a sigh of relief that this part of the project is finally underway. It signals that the current government under the new administration is pro active,” Kenanga head of research Yeonzon Yeow told StarBiz yesterday.

A signing ceremony to formalise the award for the construction of the RM1.3bil tunnel was held yesterday between the parties involved. It was witnessed by Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui.

The main contractor for this project is a consortium in which Japanese contractors Shimizu Corp and Nishimatsu Construction Co Ltd each has an interest of 30% – a majority of 60% – while IJM Corp Bhd and UEM Builders Bhd have 20% each.

It is understood that every party has seconded the relevant staff to a project management team, which will then manage the project collectively.

The tunnel project, which is aimed at meeting the needs of water consumers in Selangor, Kuala Lumpur and Putrajaya until 2025, is estimated to have an overall cost of about RM3.9bil. The RM1.3bil is the first of four phases in the RM3.9bil tunnel project. Besides the tunnel project, there are other works involved in the entire water transfer project, which is estimated to have a cost of about RM8bil. The remaining contracts have not been awarded but it is understood that interested parties have already been pre-qualified for the remaining work packages. When contacted, a UEM Builders Bhd spokesman said the company was “considering” pursuing the other packages in the entire project but did not elaborate.

Kenanga’s Yeow said yesterday’s signing between the parties would serve as a “benchmark” for other key government projects to be sped up. “It bodes well for the economy because then, domestic spending is able to compensate for weaker export sales which is what the Government intended in the first place to counter a major slowdown in economic growth,” he said.

The bulk of the tunnel project cost will be financed through a loan from the Japan International Corp Agency (JICA) while the rest will be funded by a federal government grant.

Once the tunnel is completed, Selangor would have to pay RM80mil a year to the Pahang government for water.