KUALA LUMPUR: The Second Penang Bridge project will still cost RM4.3 billion despite the fall in oil prices, and it is on track to be completed by mid-2012, the Dewan Rakyat was told on March 3.

Deputy Minister in the Prime Minister’s Department Datuk S K Devamany said the contractual cost was fixed at RM4.3 billion but there could be variation in prices for several items.

The contract for the superstructure was awarded to UEM Builders Bhd subject to a final agreement with Jambatan Kedua Sdn Bhd (JKSB). He added that the land highway package would be implemented via an open tender, adding JKSB was preparing the tender documents.

“As of now, there is some delay in the implementation of the project as the contractor involved has not been able to enter the construction site at Batu Kawan,” Devamany said in reply to a question by Lim Guan Eng (DAP–Bagan).

Lim had asked the prime minister to state the status of the tenders for the superstructure and the land highway packages for the Second Penang Bridge and whether the cost of the project would be reduced due to the drop in oil prices.

Devamany said the federal government would finalise negotiations with the Penang state government and affected clam breeders on  compensation.

He expected the contractors to start work early this month once JKSB had compensated the clam breeders for vacating the site.

“Nevertheless, the delay to the work schedule is not worrying as it is not expected to affect the completion date of the Second Penang Bridge by middle of 2012,” the deputy minister said.

According to Devamany (BN–Cameron Highlands), the RM4.3 billion construction cost did not include the RM110 million to reclaim the land, RM100 million to compensate the fish and clam breeders, and development cost of some RM285 million.

He said a special-purpose vehicle set up by UEM Group Bhd would finance the project via loans from China ExIm Bank and Bank Pembangunan Malaysia Bhd as well as equity contribution by the UEM Group.

“The loan of US$800 million (RM2.8 billion) from China ExIm was based on a low and irresistible interest rate of 3%. This is far lower than what was offered by the local capital markets and other financial institutions” he added.
 
Devamany said the loan from Bank Pembangunan Malaysia was RM1.4 billion while equity contribution by the UEM Group amounted to RM50 million, adding that the government would bear the remaining RM260 million in financing.