Fees for reports on Penang Undersea Tunnel very front-loaded

Dato’ Eric See-To

Based on the breakdown on costs in a written answer given in the May 2017 Penang State Assembly, the total consultant fee for 10.5 km Teluk Bahang to Tanjung Bungah road cost more than the fees for the more complicated tunnel that cost 10 times more to construct.

The 10.5km dual 2 lane Teluk Bahang to Tanjung Bungah road with a targeted speed limit of 70-80km/h is considered a relatively easy road to build with 5 interchanges with 80% of the road being at ground level.

  1. Fees for doing reports for the RM6.34 billion Penang Undersea Tunnel and 3 roads project is strangely very front-loaded and seems designed to allow the Tunnel SPV company to benefit up-front.

It appears that the Penang State Govt is overly generous to the SPV.

  1. Fees for reports for 10.5km road that cost RM378mil to construct is RM120 mil. However fees for the Tunnel is just RM96mil even though construction cost is RM3.5 billion.
  2. The 10.5km road, with 8km being ground-level road,. is less technically challenging compared to undersea tunnel
  3. Road was to start construction in 2015 but is now 4 ½ years delayed. Tunnel is only supposed to start construction in the year 2023 for completion in 2028.
  4. Out of the total RM305mil cost of studies, 72% or RM220mil has already been spent on the cost of studies for construction of the 3 roads despite the construction cost being only 36% of total construction cost of the project.
  5. The construction cost of the 3 roads is RM2 billion. Thus the cost of reports for the 3 roads is 11% of the cost of construction – 400% higher than allowable under the Board of Engineers guidelines.
  6. Even if the Tunnel portion of the project be cancelled later, there, the bulk of consultant fees has already been fully paid in the form of valuable state sea-side land.
  7. Since 2015, the Tunnel SPV company is already developing and selling a RM800mil property project on the RM220mil land that it has already received as payment.
  8. In the meantime, construction of the first road has yet to begin. The original timeline to start construction in Jan 2015 has now been pushed back to mid-2019 – with apparently no penalties imposed by the Penang State Govt.

Source: Eric See-To

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