This article first appeared in The Edge Financial Daily on February 21, 2020 - February 27, 2020

KUALA LUMPUR: The Sarawak Public Works Department (JKR Sarawak) has been appointed as the superintending officer for the state’s portion of the Pan Borneo Highway (Sarawak PBH) project. It will be responsible for monitoring and supervising the implementation of the project as well as managing the administration of contracts.

Works Minister Baru Bian handed over the letter of appointment to JKR Sarawak at a ceremony in Kuching yesterday.

Under the new arrangement, the federal Public Works Department (JKR Malaysia) will be the independent consulting engineer providing consultancy to the ministry and JKR Sarawak to ensure the project’s compliance with technical specifications and periodic auditing.

In May 2019, the federal government decided that the works ministry will take over the project under a conventional model project arrangement. Following that, a notice of termination of the highway project delivery partner (PDP) contract was delivered to Lebuhraya Borneo Utara Sdn Bhd (LBU) on Sept 20, 2019 and came into effect yesterday.

Linked to Sarawakian tycoon Tan Sri Bustari Yusof, LBU was awarded the contract for Phase 1 of the Sarawak PBH project worth RM16.49 billion in 2015. Bustari is the brother of former works minister Datuk Seri Fadillah Yusof.

Baru updated that the government is expected to save RM2.865 billion from the initial RM21.857 billion under the PDP contract, bringing it to RM18.99 billion under the conventional model. However, the final amount saved will only be realised after a full evaluation is carried out in the future, he added.

Finance Minister Lim Guan Eng on Feb 6 said the federal government would save some RM3.1 billion or 14% of the total cost of the Sarawak PBH project under the new project funding agreement.

He said the lower cost was due to the removal of a 5.5% service fee imposed by LBU in the previous agreement.

Putrajaya terminated the PDP contract as it aims to reduce the country’s financial implications and utilise its existing expertise.

Besides that, Baru said it is also an improvement to the project in terms of its implementation structure by maintaining only the necessary consultancy contract services without compromising the scope, safety and sustainability of the project.

“In addition, the traffic management plan and maintenance during construction will be improved through direct and ongoing monitoring by the ministry and JKR Sarawak,” he said yesterday.

According to a previous report by the PDP in January 2020, the progress of the project is 44.21% compared to 47.82% as scheduled for completion of the project on Aug 30, 2021, which is a two-month delay of the completion date under the PDP agreement.

However, based on a review by Sarawak JKR in January 2020, Baru said the actual progress of the project was 45.81% compared to 61.23% of the supposed completion.

Baru added that further engagement with the work package contractors has revealed that the project is expected to be completed by June 2022.

“Accordingly, during this three-month transition period (February-April 2020), JKR Sarawak will be reviewing the contractors’ work programme,” he said.

For the Sarawak PBH project, there are 11 work packages over a span of 786.41km. The project commenced in October 2015 and was initially expected to be completed by June 30, 2021. So far, one work package contract — from Teluk Melano to Semantan covering 33km — has been completed as at Jan 6, 2019.