|
Or why the 2nd Penang Bridge is doomed to fall way behind schedule (The Malaysian Insider) - To understand why infrastructure projects during Datuk Seri Abdullah Ahmad Badawi’s first term in office always seemed stuck at the drawing board stage, look no further than the fiasco surrounding the Second Penang Bridge.
It will show a prime minister unable to make hard decisions fast, the bias of Ministry of Finance officials in awarding big projects to inefficient government-linked companies instead of IJM or Gamuda. It will show the disconnect between launching a high-impact project and actually getting it off the ground. It will show the culture of non-performance in the public sector. Food technology parks, aquaculture centres and several other high-impact projects approved by the Economic Planning Unit, Ministry of Agriculture and other government agencies are all at planning stage or barely breathing. There has been glacial progress on big projects under the Northern Corridor Economic Region, with the implementation authority still sorting out administrative issues. So embarrassing is the government’s track record that there should be a rethink on whether projects should be placed into the high impact or fast track category. The Second Penang Bridge is a fast track project. Or at least it was on paper. When the PM said on Tuesday that there would be a delay in the completion of the project because of problems due to problems in land acquisition, design and rising cost, he was stating what government officials and the Chinese government had known for months. The project has been mired in red tape since July 13, 2007 – when several landmark agreements were signed to pave the way for the construction of the bridge. On that day, Malaysia and China inked a US$800 million loan agreement, the largest given by China for a single project in a foreign country. MOF officials including Second Finance Minister Tan Sri Nor Mohamed Yackop were elated, noting that the terms of agreement, which included an interest rate of 3 per cent per annum over 20 years was very favourable. “With this project, we are literally building a bridge with China,” he said during a press conference. The loan agreement was signed by the Malaysian government, China's Exim Bank and Bank Pembangunan (Malaysia) Bhd. A contract was also signed between UEM Group Bhd, JV Consortium of China Harbour Engineering Company (CHEC) and UEM Construction. Nor Mohamed was quoted in The Star as saying that the second Penang Bridge would be a signature project under the Ninth Malaysia Plan and a major catalyst for economic growth and investment in the Northern Corridor. “The Government is committed to see this project implemented on a fast track and have the bridge open for use in 2011,” he added. But by then, mistakes had already been made. It was China’s Road and Bridge Group that mooted the idea of a second crossing to Penang when Tun Dr Mahathir Mohamad was in power. At that point, there was no pressing need for another link and the idea was put on the backburner. The Chinese company approached Dr Mahathir again when he had retired and he suggested that they make a case to the new government. The idea was floated to the Abdullah administration and he agreed on the need for a second bridge because of the traffic congestion. By then, the Road and Bridge Group had merged to become China Harbour Engineering Company. From the onset, the government believed that working with China on this project would cement Kuala Lumpur’s special relationship with Beijing and pave the way for Malaysian companies to be given preferential trade treatment. On their part, China was keen to show that it valued Malaysia’s loyalty as a friend and saw the bridge project as an ideal opportunity to show case the softer side of its economic prowess to Southeast Asian nations. Abdullah and China’s Wen Jiabao discussed the bridge on the sidelines of an Asean meeting in Naning and the Chinese leader gave an assurance that a special loan facility would be arranged for the Penang project. The Malaysian government felt that UEM being the concession holder for the first bridge should also get the toll concession for the second crossing. Instead of opening up project to the private sector, MOF officials also felt that UEM being a GLC should be given a stake in the construction of the 24-km link. One party was a world famous company which had built more than 30 bridges and another was the concession holder of the first bridge. The only thing they had in common was distrust for each other. This was a marriage made in hell, say officials familiar with negotiations. UEM felt that it could have built the bridge by itself despite having little experience in construction over the sea while CHEC felt it had been saddled with a partner with limited expertise and a lack of urgency about the project. There was a disagreement over who should design the bridge with CHEC again saying that it had the experience and UEM standing firm. There was a deadlock of a few months before Abdullah intervened. This design issue has only just been sorted out. It was a pattern that would play itself out over and over again. By late 2007, frustration was beginning to show on CHEC’s side over the slow pace of movement on the project. The Malaysian Insider understands that a committee had been set up by the Chinese government to monitor the construction of the bridge. It was applying pressure on CHEC and making it clear that the company would bring shame to China if the bridge was not completed by 2011. Senior executives of CHEC knew that this was a veiled threat from Beijing. Perform of else… But there were continuing disagreements between UEM and CHEC over various issues, including apportioning of work and costing. Finally, it was decided that CHEC would build the crossing over the sea while the GLC would handle the land portion. More intractable was the discussion over costing. It was clear early on that prices of steel and other materials rising, the initial cost of RM3.6 billion could not be met. By late last year, Abdullah roped in former Public Works Department director-general Tan Sri Zaini Omar to crack the whip and speed up the project. He even enhanced Zaini's powers as head of a task force after realising that civil servants and officials from UEM were not really listening to his directives in the early days after his appointment. Zaini has had a tough time bringing any closure to the haggling over the cost of the bridge. On one hand, CHEC says that it can build the 17-km sea portion for RM2.3 billion while UEM says that its needs RM1 billion for the 7-km land portion and RM1.5 billion box girdle structures. The GLC has also asked for a concession fee of RM280 million. With input from Zaini, the government says that it is unwilling to pay more than RM4.3 billion. He is now squeezing both parties to bring down cost. The Malaysian Insider has learnt that UEM has reduced the land portion but industry sources still argue that the government would be setting a precedent by paying them a RM280 million concession fee. MOF officials are leaning towards allowing the GLC to claim that fee. Both parties have been asked to prepare final submissions on cost for the Finance Minister. Unless he is willing to make a tough decision, this fast track project is destined for a life in the slow lane.
 |
