KUCHING: Lebuhraya Borneo Utara Sdn Bhd (LBU) is laying off more than 500 employees as its role as the project delivery partner (PDP) ends tomorrow.
Most of those retrenched are Sarawakians while others losing their jobs are Malaysians, including construction engineers, from Peninsula Malaysia.
“The retrenched employees include those working at LBU headquarters here and 25 site offices throughout Sarawak.
“They are compensated based on their length of services with the company - about one month salary for every year of service.There are no other layoff benefits, ”a LBU source told StarBiz yesterday.
The source said with the exception of a handful, like finance staff, who would stay until May, the other employees would leave LBU on Wednesday.
It is understood that most of the retrenched employees are still on the lookout for new jobs.
LBU received the PDP’s termination letter from the federal Works Ministry on Sept 20,2019.
Linked to Sarawakian tycoon Tan Sri Bustari Yusof, LBU was awarded the contract (phase 1) of Sarawak Pan Borneo Highway project for about RM16.49bil in 2015. Bustari is the brother of former Works Minister Datuk Fadillah Yusoff.
The project, which spans 786.4km from south to north Sarawak. was awarded in 11 work packages to mainly listed construction companies from Sarawak, which formed joint ventures with their Peninsula-based counterparts. One of the work packages from Telok Melano to Sematan (32.77km) in southern Sarawak was completed early last year.
According to Finance Minister Lim Guan Eng, the cancellation of LBU PDP contract would reduce the cost of the Sarawak Pan Borneo Highway project to RM18.8bil from RM21.9bil, thereby saving the government RM3.1bil.
Most of the savings would come from the removal of a 5.5% service cost imposed by LBU.
Fadillah had disputed Lim’s claims on the amount that would be saved.
Works Minister Baru Bian said last week that his ministry would announce the actual cost of the project after taking control of its ownership on Feb 20
It has been reported that the termination of the PDP contract would not affect the main contractors of all the remaining 10 work packages as their agreements would be novated.
The current average progress of the work packages is 43%.
“The project is originally scheduled to be fully completed by June 2021.But now with the change of the PDP and handover of the project to the Public Works Department, some delays are anticipated, ” said an industry source.