China firm bags RM2.32 bil STP2 job

KUALA LUMPUR (Oct 29): Lifestyle property developer Eastern & Oriental Bhd (E&O) has awarded RM2.32 billion worth of land reclamation works to Chinese contractor China Communications Construction Co Ltd (CCCC) for the proposed Seri Tanjung Pinang Phase 2 (STP2) project in Penang.

In a filing with Bursa Malaysia yesterday, E&O said its subsidiary Tanjung Pinang Development Sdn Bhd had issued a letter of award (LoA) to CCCC’s Malaysian unit China Communications Construction Co (M) Sdn Bhd (CCCCM) to undertake the proposed project.

The LoA serves primarily as an acceptance of the tender to reclaim Phase 2A of STP2, an area measuring 384 acres (155ha), which includes the 131-acre Gurney Drive foreshore (Package 1), for a contract sum of RM1.04 billion.

“The prescribed period to complete reclamation works under Package 1 shall be approximately 30 months from the formal acceptance of the LoA by CCCCSM,” said E&O.

The LoA also includes the conditional award for the proposed land reclamation works for the remainder of STP2, made up of Phase 2B and Phase 2C covering an area of 507 acres (Package 2).

E&O said the contract sum for Package 2 is RM1.29 billion, subject to adjustments arising from fluctuations in exchange rate and the price of fuel, and changes in cost if applicable.

“The award of Package 2 shall be strictly conditional upon approvals of the board of directors of Tanjung Pinang Development and E&O and of the relevant regulatory authority on the scheduling of works,” said E&O.

With the latest award, physical works on STP2 will commence in the “near future”, it added.

In a separate statement yesterday, E&O group managing director Datuk Seri Terry Tham Ka Hon said efforts to secure the financiers for the project are being pursued concurrently and will be finalised soon.

“With the reclamation contractor identified and financing arrangements soon to be firmed up, we look forward towards operationalising STP2 and bringing the project to fruition with mobilisation and commencement of works targeted by the year end,” he said.

He added that the group went through a rigorous tender process that included the pre-qualification of potential contractors prior to the tender submission to select the reclamation contractor.

“We believe that in terms of technical competency, track record, local project experience as well as contract competitiveness, the shortlisting of reputable international firms has led us to finalise the award to CCCCM,” said Tham.

CCCC is listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. It is the largest infrastructure construction and dredging company in China and the world’s largest dredging company in terms of both total capacity of trailing suction-hopper dredgers and total cutter-section dredgers, the key machinery in the reclamation dredging process.

In Malaysia, CCCC’s previous project was the design and construction of the 24km Penang Second Bridge.

E&O shares closed unchanged at RM1.56 yesterday, with a market capitalisation of RM1.95 billion, while CCCC's stock ended the day down 1.28% or 14 Hong Kong cents (8 sen) to HK$10.80 on the Hong Kong Stock Exchange, with a market capitalisation of HK$254.31 billion.

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This article first appeared in The Edge Financial Daily, on Oct 29, 2015. Subscribe to The Edge Financial Daily here.