Monday 22 Apr 2024
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KUALA LUMPUR: The multi-billion ringgit project to build various roads in Penang and an undersea tunnel between Penang island and Seberang Prai is picking up pace. Astral Supreme Bhd has been given the mandate to undertake feasibility studies and detailed design (FSDD) work for the job.

In an announcement yesterday, Astral Supreme said it had entered into joint venture (JV) agreement with Zenith PMC Sdn Bhd (ZP) to undertake FSDD work for the Projek Pembinaan Jalan-jalan Utama dan Terowong di Pulau Pinang. The contract is worth RM275 million.

Among the key conditions for the JV to take off is that the principal project agreement between the Penang government and Consortium Zenith BUCG Sdn Bhd is firmed up by Nov 30 or any other extended date agreed by both parties.

"If the principal project agreement between the state government and consortium is not executed by Nov 30, 2013, or such other extended date, the JV agreement (between Astral Supreme and ZP) will automatically terminate," the company said.

If the contract is terminated, ZP will reimburse all payments made to consultants by Astral Supreme. The JV agreement also comes with a profit guarantee of a minimum RM15 million from ZP.

Astral said, "In the event the JV profit is less than the guaranteed profit, ZP shall pay to Astral an amount equivalent to the shortfall."

In a letter dated Feb 6, the Penang government had agreed in principle to the proposal by Consortium Zenith BUCG to undertake the project valued at an estimated RM6.5 billion.

Apart from the 6.5km undersea tunnel, the project entails a 4.5km bypass from Gurney Drive to Lebuhraya Tun Dr Lim Chong Eu, a 4.6km bypass between Lebuhraya Tun Dr Lim Chong Eu and Bandar Baru Air Itam and a 12km paired road from Jalan Tanjung Bungah to Teluk Bahang.

Consortium Zenith BUCG  comprises the JV between Zenith Construction Sdn Bhd  and China Railway Construction Ltd, in addition to Beijing Urban Construction Group, Sri Tinggi Sdn Bhd and Juteras Sdn Bhd.

(From left) Consortium Zenith BUCG Sdn Bhd chairman Datuk Zarul Ahmad Zulkifli, Zenith PMC Sdn Bhd executive director Wong Kwai Wah, Astral Supreme Bhd executive director Andy Lee Heng Khen and Astral managing director Ong Tai Chin at the signing ceremony.

In return for building the infrastructure, the consortium will be given 44ha of reclaimed land in Tanjung Pinang and a 30-year concession to collect toll for the undersea tunnel as payment for the four planned infrastructure projects totaling RM6.3 billion.

The state and the consortium have not yet signed on the dotted line for the project that was initiated by Penang Chief Minister Lim Guan Eng.

Zenith Construction Sdn Bhd (ZC) is one of the major shareholders of consortium and ZP is a wholly owned subsidiary of ZC.

The consortium intends to commence various preliminary works relating to the project prior to the execution of the principal project agreement and has appointed project management consultant ZP to carry out the FSDD.

ZP will pay to Astral 25% of the JV profit and retain 75% of the remaining profit.

Astral noted that the proposed JV is in line with its plan to venture into profitable business and is part of Astral's strategy to accelerate the growth plans of its business.

"The joint venture is envisaged to contribute positively to the earnings per share and net assets per share of the company," said Astral, adding that it would not have any material effect on the gearing of the company, as it will be funded from internal funds.

This article first appeared in The Edge Financial Daily, on August 16, 2013.

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