Wednesday, April 1

Fadillah: RM3.1b savings from Pan Borneo PDP contract termination ‘exaggerated’


Datuk Seri Fadillah Yusof. – File photo

KUCHING: Petra Jaya MP Datuk Seri Fadillah Yusof has blasted Finance Minister Lim Guan Eng for claiming that the federal government will save RM3.1 billion with the recent termination of the Pan Borneo Highway’s project delivery partner (PDP) contracts.

In a statement issued today, Fadillah, who was formerly the works minister under the previous administration, claimed that Lim had inflated the original price from RM16.5 billion to RM21.9 billion.

“As with many of his exaggerated and downright false claims in the past, his latest statement that the government will save RM3.1 billion or 14 per cent by reducing the cost of the Sarawak Pan Borneo from RM21.9 billion to RM18.8 billion by canceling the existing project with the PDP is again misleading and deceitful.

“The original Target Cost ceiling of the project is RM16.488 billion – not RM21.9 billion, with a targeted delivery date of end 2021,” said Fadillah.

Fadillah also claimed with the cancellation of the PDP model and the changes announced by Lim, the Sarawak highway project now runs a real risk of being delayed from its original targeted date of end 2021 and the risk of the project’s cost being much higher than the current RM15.13 billion targeted cost.

“When that happens, all Sarawakians should know who is responsible,” he said.

Fadillah said the delivery schedule of the project until now was well on track while costs have been well-contained.

“In fact, the PDP had announced in March 2019 that it was able to achieve further cost savings of RM2 billion from the original Target Cost as a result of efficient design, cost and change control management.

“As such, the original Target Cost has further been revised downwards to RM15.13 billion currently – a figure that is well lower than Guan Eng’s stated RM21.9 billion original cost and his downward revised cost of RM18.8 billion,” he said.

He also explained the reason why the previous Barisan Nasional government had adopted the PDP model was due to its success in the MRT 1 project which was delivered below the original budget and within the targeted completion date.

“It is also a result of the previous government learning from past experiences.

“With the PDP model, awarded company is incentivised to keep within the Target Cost. Cost overruns will lead to expensive penalties in the form of fee reduction,” he added.

He also pointed out this was also the reason why the state of Penang had adopted a similar PDP model for their RM46 billion Penang Transport Masterplan project.

“As it is, DAP does not have a stellar track record of meeting targeted cost and targeted completion dates for their infrastructure projects in Penang,” Fadillah said.

At a press conference in Putrajaya yesterday, Lim said the federal government would take on the construction of the remaining 786.4km of the Sarawak’s stretch of the highway after the termination of the contracts with the PDP.

According to Lim, the decision to terminate the contracts would save some RM3.1 billion in costs, most of it from the removal of a 5.5 per cent service cost imposed by the PDPs.

He had said the RM3.1 billion gained in savings would be channeled back towards development and infrastructure projects in Sarawak to ensure proper socio-economic development in the state.