PENANG, July 2 — Construction giant UEM Berhad (UEM) went on a charm offensive today to convince mainstream media editors that some progress has been made on the construction of the Second Penang Bridge.
Datuk Ahmad Pardas Senin and other senior officials also attempted to make a case for the higher cost of the crossing. Government officials have told The Malaysian Insider that the cost of the bridge will be capped at RM4.3 billion but UEM officials today said that the cost is inching closer to RM4.58 billion and could rise even further, citing the spike in raw materials.
It is understood that the UEM estimate includes the controversial development fee of RM285 million which the government is not keen to pay to the government-linked company, especially as the Economic Planning Unit of the Prime Minister's Department has decided against awarding the concession to manage the bridge and collect the toll to UEM.
Instead, the government will have an open tender before appointing a company to operate and maintain the bridge and collect toll on its behalf.
Government officials opted for this model because the Ministry of Finance is funding the bridge through soft loans and there is the belief that the toll should go towards servicing the loan. Also, not giving the concession to UEM will save the government some RM18 billion over four decades.
In the past, the government has had to make up the shortfall to concession holders when the latter were not allowed to raise toll rates as spelt out in the contract.
UEM told the media editors in a briefing in Penang that the land portion of the crossing will cost RM997 million while the sea portion is RM3.32 billion. They added RM285 million for design, concept and preliminary work.
This cost estimate is likely to face some opposition from Finance Ministry officials and the task force headed by Tan Sri Zaini Omar. Industry sources say that the six-kilometre land portion can be built for RM700 mil, even taking into account a healthy profit margin, instead of RM997 million.
Also, though UEM is claiming RM285 million for design and concept, industry sources say that the design and concept of the crossing was developed by China Harbour Engineering Company (CHEC), UEM's partner. China provided a US$800 million loan to finance the bridge construction.
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