PETALING JAYA: After more than 10 years, Phase 1 of the Sabah Pan Borneo Highway (LPB Sabah) is still incomplete, with prolonged delays inflating its overall cost by more than RM1bil, according to the Auditor-General’s (AG) Report.
As of March, only four of the 35 work packages, costing RM567mil, had been completed.
The remaining 31, valued at RM16.319bil, were still under implementation. Nine were classified as sick projects and 13 were behind schedule.
The report, Series 2/2026, tabled in Parliament yesterday, said the project was planned as early as 2015, with construction originally scheduled to take 69 months, from April 11, 2016, to Dec 31, 2021.
It identified several issues affecting the project, including delays, unavailability of project sites before works began, utility relocation, design changes, weaknesses in project monitoring, non-compliance with regulations and contractual requirements, as well as weaknesses in project governance and management.
“These findings show that the challenges faced involve not only on-site implementation and complex factors involving multiple stakeholders, but also planning, inter-agency coordination and comprehensive project monitoring.”
The audit found weaknesses in project planning, implementation and monitoring that affected the completion period, implementation costs, achievement of project objectives and the benefits intended for the people.
The delays had affected development targets and the provision of safer and more efficient road networks for users in Sabah, while increasing the overall contract cost from RM17.91bil to RM18.96bil, the AG said.
“The current cost of Phase 1A is estimated at RM11.323bil, exceeding the original project ceiling of RM10.336bil by RM0.987bil, or 9.5%.
“The overall project cannot be completed unless additional funding is approved by the government,” the report said.
It also identified non-compliance with contractual requirements and applicable regulations, including site works commencing before approval of the environmental impact assessment report, delays in finalising contract documents, payments for inappropriate expenditure involving preliminary work items, and approval of variation orders exceeding the prescribed limits.
Irregularities included RM6.03mil in government funds being used to cover the Construction Industry Development Board levy, a cost that the contractor should have borne.
The government also had to bear RM32.95mil in bond and insurance payments due to differences between the amounts actually paid by the work package contractor and those paid by the government to the contractor.
“Irregular payments amounting to RM163.64mil were also made in excess of the permitted limits due to delays in finalising the contract documents.
“Meanwhile, expenditure exceeding the contract value for items under the project information system amounted to RM0.89mil, while payments totalling RM4.08mil involving 19 invoices could not be made.”
The audit identified weaknesses in managing work variations, adhering to approval authority limits and contractual obligations, monitoring the project timeline, and following up on contractor delays and non-compliance.
It said these issues needed to be addressed to avoid financial and legal implications for the government.
On the Sarawak Pan Borneo Highway project, the report said 10 work packages had been completed, while another, WP11, had reached 99.9% completion.
“Based on the preliminary report by the Sarawak Public Works Department and the audit findings, the project had a positive impact on economic and social activities along the project corridor, including commercial, agricultural, tourism and construction sectors, as well as the development of new roads and increased revenue,” it said.
