KUALA LUMPUR: The proposed construction of the 7.2km undersea tunnel linking Penang island to the mainland and 5.7km Bandar Baru Air Itam-Tun Dr Lim Chong Eu Expressway bypass has hit a further snag with Mudajaya Group Bhd
withdrawing from the project.
In a filing with Bursa Malaysia, Mudajaya said its unit Mudajaya Corp Bhd and Consortium Zenith Construction Sdn Bhd (formerly known as Consortium Zenith BUCG Sdn Bhd) had mutually decided that it would be difficult to proceed with the obligations under the letter of award and further proceed with the project due to some uncertainties.
Mudajaya Corp had on Dec 1 last year accepted the letter of award from Consortium Zenith to undertake the proposed construction for RM810mil.
Site possession for the 36-month project was initially expected to be secured by the end of this year.
Uncertainties that are making it difficult to carry on the project include the uncertainty in being able to secure the exact date for the site possession, the uncertainty in signing the construction contract, and insufficient information provided for the project causing a lapse of time to the timelines in the letter of award.
“Accordingly, it has been mutually agreed that, in the best interest of both parties, Mudajaya and Consortium Zenith shall mutually and amicably withdraw and end each other’s obligations under the letter of award. As such, the letter of award was mutually withdrawn and ended effective from Nov 10, 2017,” said Mudajaya.
The company added that the mutual withdrawal was not expected to materially affect the earnings and net assets of Mudajaya Group as the group had concurrent ongoing projects.
Last month, Consortium Zenith senior executive director Datuk Zarul Ahmad Mohd Zulkifli was quoted as saying it was not urgent to complete the feasibility study on the proposed undersea tunnel and the company would focus instead on the Air Itam-Tun Dr Lim Chong Eu bypass and north coastal paired road projects.
Consortium Zenith was awarded contracts worth RM6.34bil by the Penang government in 2013 to build the undersea tunnel and three paired road project.
Under the mega infrastructure project, Consortium Zenith would design and build the undersea tunnel and three roads, after which it would also operate and maintain the tolled tunnel for at least 30 years.