Penang and Zenith to sign undersea tunnel job on Sunday

KUALA LUMPUR: Consortium Zenith BUCG Sdn Bhd will sign a preliminary agreement with the Penang government this Sunday to carry out feasibility studies and detailed design works (FSDD) for the proposed Penang undersea tunnel, which reportedly will cost RM6.3 billion.

“This is the prelude to the major road and tunnel works that we will execute after we have submitted the feasibility studies and after it has been approved,” Zenith BUCG chairman Datuk Zarul Ahmad toldThe Edge Financial Daily.

“The main agreement will come after we receive this approval, then we will proceed with the detailed design and detailed environmental impact assessment (DEIA). Once the DEIA has been approved, we will start construction,” he said.

On Sunday, Zenith BUCG will also sign an agreement with China Railway Construction Corp International (CRCC), a China state-owned conglomerate, for a detailed design of the project, engineering, procurement and construction of the major roads and tunnels.

Penang chief minister Lim Guan Eng and CRCC’s chairman will be present for the signing ceremony this Sunday.

Zarul: This is the prelude to the major road and tunnel works that we will execute after we have submitted the feasibility studies and after it has been approved.

CRCC is currently in a joint venture with Zenith Construction Sdn Bhd for the RM6.3 billion project. Together they own a 70% stake in Zenith BUCG. The remaining members in the consortium are Beijing Urban Construction Group, Sri Tinggi Sdn Bhd and Juteras Sdn Bhd, each of which hold a 10% stake. However, it is not clear yet how much equity each partner will pump into the deal.

In a previous interview with The Edge, Zarul said bankers, both local and international banks, were keen to provide funding for the project. The 10-year job will see the construction of a 6.5km undersea tunnel connecting George Town with Butterworth, and three bypasses on Penang island of over 20km, including a tunnel portion to divert traffic.

The project will be funded without a government soft loan. The funding structure will involve the Penang government awarding 110 acres of its entitled landbank on Eastern & Oriental Bhd’s Sri Tanjung Pinang 2 and a 30-year toll concession to operate the tunnel.

The 110 acres that Zenith BUCG will receive are split, with 50 acres along the shoreline of Gurney Drive and the other 60 acres on the reclaimed island itself.

This article first appeared in The Edge Financial Daily, on October 03, 2013.



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