PDP change will not impact current packages
KUCHING: Any potential change in project delivery partners (PDP) for the Pan Borneo Highway will have minimal impact to the existing work package contractors for Pan Borneo Sarawak as most of the work packages have been awarded and are progressing well.
According to the research team at Kenanga Investment Bank Bhd (Kenanga Research), with details still scarce, Kenanga Research believed that the changes could further impact the timeline for Pan Borneo Sabah as some of the work packages have not been awarded yet.
Kenanga Research noted that the Sabah Pan Borneo Highway construction is already behind schedule with the 12 awarded packages progress status currently ranging between nil to 48.5 per cent.
“We also note that the nonperforming award package for WP15 has been terminated in July 2018, waiting to be retendered. As for the 23 remaining packages, we gather that five packages have received the green light from Ministry of Finance (MOF),” it said in a special report yesterday following its study trip to East Malaysia.
Based on its initial expectations, the research team expect these five packages to be awarded in the first half of 2019 but it noted that based on a recent article by The Edge Weekly regarding a potential legal wrangling between Putrajaya and the Sabah
We also note that the non-performing award package for WP15 has been terminated in July 2018, waiting to be retendered. As for the 23 remaining packages, we gather that five packages have received the green light from Ministry of Finance (MOF). Kenanga Research
government over control of the Pan Borneo highway has led to uncertainties in the market.
“Nevertheless, we expect the projects to be awarded later in 2H19. We gathered that nine packages are ready for the tendering process, while the remaining nine packages are under review,” it added.
All in, it pointed out that the main issues causing delay to the Pan Borneo Highway project in Sabah are the land acquisition process and EIA approvals.
“Based on our understanding, out of the 12 packages already awarded to contractors, only two land acquisition packages have been cleared. We understand that the land compensation payment process is done at Sabah State government level channelled by the (MoF).
“Hence, we believe that it would be highly ambitious for Borneo Highway PDP should they aim to complete the construction works for Sabah Pan Borneo highway by 2021 and extension of time is inevitable if they are unable to solve the land acquisition issues,” Kenanga Research added.
Meanwhile, Sarawak has been deemed by analysts as ‘the land of opportunities’, driven by the Sarawak government push for several major projects across Sarawak to improve the livelihood of Sarawakians.
They pointed out that with the support of the Sarawak government, local companies and contractors stand to benefit from this development.
Kenanga Research saw that the Sarawak state government has an allocation of circa RM11 billion to be spent on infrastructure works such as coastal highway, water supply, electricity connectivity projects, and other projects over the next two years.
“An interesting observation we gathered during our trip to Sarawak is the state government’s support in growing their local companies.
“Hence, we believe that local Sarawak players like Sarawak Energy Bhd, Bintulu Port Holdings Bhd (Bintulu Port), Hock Seng Lee Bhd (HSL), Cahya Mata Sarawak Bhd (CMS), NAIM Holdings Bhd (NAIM), and KKB Engineering Bhd (KKB) could benefit from Sarawak state government’s effort in improving the livelihood of Sarawakians,” it highlighted.
“During our ground visit in Kuching and Bintulu, we can feel the excitement from the local contractors which we visited such as CMS, NAIM and KKB as they are all geared-up to participate in the open tender for the abovementioned projects, especially for the coastal highway project.”
Currently, the research team pointed out that the Sarawak Pan Borneo highway is progressing with more traction at an overall progress of circa 35 per cent which it deemed as encouraging for a mega project with limited resources and logistic challenges.
“Hence, we came back feeling reassured with the prospects in Sarawak as we believe that the Sarawak state government possess the will to implement the above-mentioned infrastructure projects that is set to improve the livelihood of Sarawakians.”