Putrajaya takes over citing cost-saving among key factors in contract termination
KUCHING: The Pan Borneo Highway project will now be in the hands of the federal government. This follows the government’s decision to terminate the contract of Lebuhraya Borneo Utara Sdn Bhd (LBU), the project delivery partner (PDP) for the Sarawak portion of the highway, according to a news report.
The decision is despite nearly half of the first phase of the Sarawak’s portion of the highway has been completed.
The Edge Financial Daily, quoting sources close to the matter, reported that the decision to terminate the PDP agreement was made after the Cabinet’s careful deliberation at a meeting on Wednesday.
Cost-saving is said to be one of the key factors that led to the termination of the existing contract held by the PDP, which is linked to Sarawak businessman Tan Sri Bustari Yusof. The contract was awarded to LBU in June 2015 when Bustari’s brother Datuk Seri Fadillah Yusof was the public works minister.
Talks about the federal government wanting to take over the project started to crop up not long after Pakatan Harapan (PH) took control of Putrajaya after the 14th General Elections in May last year.
Kenanga Research believes the take-over will have limited impact on contractors already working on the Sarawak portion of the project.
It, however, will cause a delay in the implementation of the Sabah portion of the 706km highway.
“We believe it would have minimal impact to the existing work package contractors for Pan Borneo Sarawak, as most of the work packages are awarded and progressing well but it could further impact the timeline for Pan Borneo Sabah, as some of the work packages are not awarded yet,” the brokerage said in a report.
The multibillion-ringgit Pan Borneo Highway project was launched in March 2015 and scheduled for completion end-December 2021.
The Sarawak portion of the highway spans some 1,060km from Telok Melano in Sematan to Merapok in Miri.
Chief Minister Datuk Patinggi Abang Johari Openg, in responding to rumour about the federal government wanting to take over the project sometime in March this year, said he was leaving it to the discretion of the federal government.
He said his only concern was that the decision would cause delay in the project completion.
“I would leave it to the federal government to decide on whether to replace the project delivery partner (PDP) model for the project,” the chief minister said.
