Govt to save RM3.1bil after taking over Pan Borneo project, says LGE

PUTRAJAYA: The Government is expected to save about RM3.1bil after taking over the Sarawak Pan Borneo project from a project delivery partner (PDP), says Finance Minister Lim Guan Eng.

Lim said this represented a savings of 14% before the agreement with the PDP was terminated.

He said with the PDP, the cost was expected to be RM21.9bil but through conventional means, the project would cost about RM18.8bil.

“This is a very important agreement because we are recording significant savings, and we intend to channel it back to Sarawak after the project is completed.

"If there are cost overruns, this will be reduced accordingly, ” he said during the signing of a new project-funding agreement between the Federal Government, the Sarawak Government, and DanaInfra Nasional Berhad on Thursday (Feb 6).

Also signed during the event was a mutual termination letter that involved the previous project funding agreement.

DanaInfra Nasional Bhd is the government’s special funding vehicle for infrastructure projects.

Lim said with the termination of the previous agreement, the government did not have to pay the PDP 5.5% of the target cost of the project as well as other reimbursable costs.

He said the Works Ministry had issued a notice of termination to the PDP last September.

He also claimed the previous agreement was not in the national interest and not conducted in a transparent manner.

Works Minister Baru Bian said after Feb 20 this year, the government would be the owner of the project.

"We would like to give an assurance that we will work with the Sarawak government through our partners, JKR Sarawak to implement the project," he said.

He explained that without a PDP, there was no middleman, allowing the government to have more savings.

When asked about compensation to the PDP, Baru said that it would be settled later.

"At this stage we haven't come to a settlement yet. It will be looked into after this," he said.

The Pan Borneo Highway project, which was launched by the Barisan Nasional government in June 2015, involves the construction of 2,333km of major roads in Sabah and Sarawak.

The Sarawak part of the project involves 786.4km.