Thursday June 12, 2008 MYT 5:17:33 PM

Penang to Fed Govt: Explain 60% hike in bridge cost

By ANDREA FILMER

GEORGE TOWN: The cost of the second Penang Bridge has ballooned from RM2.7bil to RM4.5bil within a year and the state government wants an explanation.

Chief Minister Lim Guan Eng said there was no reason for such a huge increase as the official rate of inflation in 2007 was around 2.3%.

“On one hand, the federal government says there is a 2% inflation rate, but at the same time they have allowed a 60% increase of about RM1.6bil for the second bridge.

“If the inflation rate is 2%, then the cost of the bridge should only rise by 2%, and if inflation is truly at 60%, then our salaries should be raised 60%,” Lim said after opening a building exhibition at the Penang International Sports Arena.

He said the federal government had to explain the steep increase in costs as Penangites would eventually have to bear the expense through toll rates.

When asked about the rising cost of raw materials such as steel, Lim said the producer price inflation was set at about 5% last year.

“The rise in the price of raw materials would also have been included when counting the inflation rate.”

On talk of Federal Government opening up the second Penang Bridge project for tender, Lim said he supported the move.

“The Penang government has always welcomed the idea of an open tender as it will produce the best and most competitive price for the second bridge. If the Federal Government plans to review the project and introduce an open tender, the state would be 100% behind the move,” he said.

The project was awarded last year to UEM World Bhd which formed a joint venture with China Harbour Engineering Co Ltd (CHEC) to build the second bridge.