Penang halts undersea tunnel study, raising doubts about construction

KUALA LUMPUR (June 15): The Penang government has issued a halt order on the 83%-complete feasibility studies and detailed design (FSDD) for the 7.2km undersea tunnel, raising doubts that the state would proceed with building the infrastructure.

Datuk Zarul Ahmad Mohd Zulkifli (pictured), chairman of Consortium Zenith BUCG Sdn Bhd (CZBUCG), which conducted the study, said it was up to the state to decide whether to construct the undersea tunnel given that the feasibility study was incomplete.

The project has been hit by a barrage of criticism from various quarters since its award by the state in October 2013, with the recent flak regarding the FSDD that costs RM305 million and land, and the need for an undersea tunnel.

It prompted Chief Minister Lim Guan Eng to suggest a third bridge to replace the more costly undersea tunnel if the federal government was agreeable to it (third bridge).

Zarul defended that the RM305 million cost was certified by an independent consultant engaged by the Penang government.

According to Zarul, the state has so far settled RM135 million in terms of a parcel of land measuring 1.48ha for the FSDD for the three roads with some RM100 million yet to be settled.

“The cost of the studies for the three roads has come up to about RM220 million. There is a piece of land that has been identified for us, but we have not reached the stage to claim it,” he said.

To recap, CZBUCG consists of the largest shareholder Zenith Construction Sdn Bhd with a 99.94% stake, teaming up with Beijing’s famed Bird’s Nest Stadium builder Beijing Urban Construction Group Co Ltd, Sri Tinggi Sdn Bhd and Juteras Sdn Bhd to beat three other submitters in a request for a proposed exercise in 2013.

On halting the FSDD, Zarul said, “We were told by the state to stop for now. It is up to the state to decide if it wants the tunnel built. We were not told of the reason, but just told to stop and focus on the three highways.

“We have completed 83% of the FSDD. We have got a ‘go ahead’ for the road (three highways) construction, but ‘no go’ for the tunnel. We will leave it to the state to decide on the tunnel.

“I think the state wants us to start with the highways immediately. We expect to start the first phase of the road project in September,” Zarul told the press conference yesterday.

Asked about the compensation in the event the undersea tunnel is cancelled, Zarul replied that the contract with the state does not provide for a proper “compensation package”.

“[I believe] as far as compensation is concerned, it is up to the job done. The state would then have to pay us for whatever work that has been done. The state’s independent consultant engineers can verify our numbers,” he said.

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This article first appeared in The Edge Financial Daily, on June 15, 2016. Subscribe to The Edge Financial Daily here.