ST: Design row keeps KL, Beijing a bridge apart January 22, 2008
Posted by elizabethwong in Current Affairs, Democracy, Economy, Malaysia.
Tags: Abdullah Badawi, BN, Ministry of Works, Penang, Second Link
Satu lagi projek Bebal Nasional.
Expect delays and cost overruns.
A PROJECT to build South-east Asia’s longest bridge in Penang has stumbled over disputes between its Malaysian and Chinese contractors and a legal suit that could embarrass Prime Minister Abdullah Badawi’s government.
Government officials and engineers involved in the project say the state-owned concerns from Malaysia and China spearheading it have been locked in a dispute over the design of the four-lane expressway.
‘The type of design is crucial because it will drive the construction methods, and the Chinese and Malaysians have their own ideas of what it should be,’ says a senior Kuala Lumpur engineering consultant involved in the project.
Unless the behind-the-scenes wrangling is ironed out soon, industry executives say, the US$1 billion (S$1.44 billion) project won’t meet its already tight deadline of 2011.
Touted as a showcase of Malaysia-China cooperation, it is also fast turning into a case study of how not to conduct government-to-government contracts.
Plans for a second crossing to link Penang and the mainland have been on the drawing board since early 2000, to help ease traffic congestion on the existing bridge that was completed in 1985.
The project is also part of the massive infrastructure development plan that Datuk Seri Abdullah hopes will spur growth in the northern state in peninsular Malaysia.
In mid-2006, the Malaysian government awarded the project to a joint-venture comprising China Harbour Engineering Corp, a unit of the state-owned China Communications Construction Group (CCCG), and United Engineers Malaysia Bhd, also a state-controlled company.
Since then, however, the project has been stuck on the drawing board.
According to engineering consultants involved in the project, United Engineers is opposed to the plan by its Chinese partners to build concrete and steel segments of the proposed expressway on large barges.
These segments will then be mounted on piers that will make up the main support structure of the bridge.
The engineering consultants say United Engineers believes that the Chinese method is costly. But China Harbour Engineering has argued it would cut building time and ensure that the project meets the 2011 deadline.
Further clouding the project is a legal challenge by a small Malaysian engineering concern that claims it was a victim of a conspiracy by CCCG and a well-connected Malaysian group to deprive it of any interest in the building of the bridge.
In its correspondence with senior Malaysian government officials and with the Chinese construction group, DCX Technologies Sdn Bhd has alleged that the project was ‘hijacked’. It said substantial elements of its original proposal to build the Penang bridge had been resubmitted by a new joint venture that ultimately won the construction contract.
The company, headed by Malaysian businessman Hug Roberts, is demanding RM105 million (S$46 million) in damages.
Court documents and other correspondence over the dispute reviewed by The Straits Times offer rare insights into the inner workings of government contract negotiations. They show how projects often get bogged down because parties involved fail to lay down clearly their respective roles before the contract is awarded.
DCX Technologies, in its legal suit filed in the Kuala Lumpur High Court two weeks ago, claims that in late 2002, it entered into an agreement with China Road and Bridge Corp, another unit of CCCG, to submit a bid to build the Penang bridge.
DCX says it provided technical input that resulted in China Road and Bridge eventually submitting a proposal on a government-to-government basis in April 2004.
At the time, large infrastructure projects had been shelved temporarily by the government because of budgetary constraints.
By the end of 2005, however, the bridge project had rocked back to life because of the growing congestion on the existing expressway.
Sometime in January 2006, DCX claims, its Chinese partner forwarded a copy of their joint proposal to its associate concern China Harbour Engineering, without its knowledge or consent.
At around the same time, DCX says, another copy was given to a private Malaysian concern HRA Teguh Sdn Bhd, headed by Datuk Latif Abdullah. Datuk Latif is a close associate of Datuk Seri Abdullah and a major shareholder of Realmild Sdn Bhd, an investment holding firm linked to the country’s ruling United Malays National Organisation party.
DCX said it also discovered in late February 2006 that China Harbour Engineering and HRA Teguh had submitted a separate proposal for the construction of the bridge.
What’s more, the proposal was identical to one of the three options contained in the proposal of DCX and its Chinese partner, the suit alleges.
In a telephone interview, HRA Teguh’s Datuk Latif acknowledges that he did obtain documents related to the Penang bridge project from China Road and Bridge.
But he denies any wrongdoing. ‘I am considering legal action (against DCX) for these allegations,’ he says.
A senior aide to Datuk Seri Abdullah says that the government is aware of the suit by DCX, but notes that the ‘decision on who should lead the project is very much for China Communications (Construction Group) to decide’.
The aide insists the Malaysian government got the ‘best possible deal’ from the contract because the bridge will be funded by a soft 20-year loan at a competitive rate of 3 per cent annually.
The legal troubles aside, Malaysia’s policy planners must also quickly resolve the dispute between United Engineers and China Harbour Engineering in order to jump-start the project.
Government officials say Datuk Seri Abdullah has appointed a former senior Works Ministry official, Tan Sri Zaini Omar, to head a special task force to resolve the issue.
Both parties held their first meeting with Tan Sri Zaini in mid-December. The government officials say that the two sides have yet to find common ground.
– By Leslie Lopez, South-east Asia Correspondent, The Straits Times