RM4.3b price tag for 2nd Penang Bridge

RM4.3b price tag for 2nd Penang Bridge

Artist impression of the second bridge.

KUALA LUMPUR, April 11 — RM4.3 billion – this will be the cost of the Second Penang Bridge. The amount was agreed after a meeting today between senior officials of Ministry of Finance, UEM and China Harbour Engineering Company.

The Insider has learnt that the government had to put its foot down and set a benchmark after initial calculations showed that the cost of the project could go as high as RM4.8 billion. Both parties UEM and CHEC argued that the cost of the bridge has increased from RM3.6 billion in 2006 because of the sharp increase in the cost of materials, especially steel.

But MOF officials insisted that the bridge can be built at the cost of RM4.3 billion and with both parties still making a reasonable profit.

Now UEM and CHEC will have to sit down and decide who is going to slash their budget and by how much. Under the agreement, UEM will

build the land portion and be in charge of making the structural girdles while CHEC handles the construction of the sea portion.

The Insider understands that UEM’s initial costing for the land portion was nearly RM1 billion and the cost of structural beams is RM1.5 billion while CHEC’s price tag for the sea portion is RM2.3 billion.

The government has to ensure that the bridge is built at a reasonable cost because this deal will be scrutinised closely by Penang Chief Minister Lim Guan Eng and his state government. Guan Eng has championed for the bridge to be funded fully by Petronas but the Abdullah administration has rejected this idea.

Still, Prime Minister Abdullah Ahmad Badawi has gone on record to say that every effort will be made to cut construction cost of the bridge. And Guan Eng will want to ensure that the federal government keeps to its side of the bargain and not pass the cost of the bridge to consumers.

The Chinese government has given a soft loan of US$800 million (RM2.6 billion) and the government will have to fork out the remaining amount of RM1.7 billion.

The Second Penang Bridge is an icon project and has been billed as a symbol of the close relationship between Malaysia and China. In recent months, though, the mood in Beijing over the project has soured due to red tape and lack of urgency here.

Preparatory work on the bridge has started and the bridge is scheduled to be completed by 2011.