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MMC-Mudajaya to clinch road job?

KUALA LUMPUR: MMC Corp Bhd and its joint venture (JV) partner Mudajaya Group Bhd are believed to be the front runner for the central spine road project that stretches from Kota Baru in Kelantan to Simpang Pelangi in Bentong, Pahang.

The project is estimated to cost RM8 billion based on earlier reports, which quoted former Works Minister Datuk Seri Shaziman Abu Mansor.

According to a source, the MMC-Mudajaya JV intends to undertake the construction of the entire 465.3km central spine project and has submitted a proposal which is being studied by the authorities.

The project is divided into several packages. They are the Kota Baru-Kuala Krai, Kuala Krai-Sg Lakit Bridge, Sg Lakit Bridge-Gua Musang, Gua Musang-Kg Relong, Kg Relong-Raub, Raub-Bentong and Karak-Simpang Pelangi routes.

The project involves the building of new roads and upgrading of the existing two-lane roads into a four-lane motorway.   

The tender for the first stretch of the project from Kota Baru to Kuala Krai in Kelantan was closed recently. It was reported that the Kota Baru-Kuala Krai portion is estimated to cost between RM1.2 billion and RM1.6 billion. It is understood that only this stretch will be subject to toll out of the 465.3km road as substantial volume of traffic is expected to pass through here, which is commercially viable.

The source said MMC-Mudajaya has proposed to undertake the construction of this stretch on a build-operate-transfer basis, in which the revenue derived will be used to finance the next phase of the project linking Kuala Krai to Karak.

“The Kuala Krai to Karak stretch is not feasible to be a tolled road as motorists will find alternative routes instead,” said an industry observer.

The Gua Musang-Kg Relong and Kuala Krai-Karak portions are currently under construction.

The source said construction of the last stretch of the spine road that links Karak to Simpang Pelangi will only commence after the Kuala Krai to Karak portion is completed.

The central spine project has been in the government’s road programme since the 9th Malaysian Plan in 2009. It has also been identified as one of the key projects under the East Coast Economic Region master plan that will strengthen the North-South sub-corridor.

Some of the benefits are improving accessibility to and from the more remote areas in central Kelantan and Pahang, and between Bentong and the south of Selangor and the Klang Valley.

When completed, the central spine project will reduce travel time by half compared with eight hours currently from Kuala Lumpur to Kota Baru.

The project marks the first partnership between MMC and Mudajaya, both seasoned players in the construction industry.

For the half year ended June 30, Mudajaya raked in a profit of RM88.25 million, a 34.46% decline from RM134.64 million in the previous corresponding period. Revenue was down to RM809.99 million from RM999.3 million.

The drop in earnings was mainly because its construction segment was affected by the tapering of delivery in equipment components at its coal-fired power plant in Chhattisgarh, India.

MMC’s cumulative six-month net profit ended June 30 dropped 93.26% to RM52.68 million, while revenue slid 31.9% to RM3.2 billion. The group said this was due to the deconsolidation of Gas Malaysia Bhd’s results after its listing in June last year.

Mudajaya’s share price closed at RM2.82 yesterday, unchanged from the previous day, while MMC ended at RM2.60, down 26%.


This article first appeared in The Edge Financial Daily, on October 11, 2013.

 

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