This article first appeared in The Edge Financial Daily on November 8, 2019 - November 14, 2019

KUALA LUMPUR: Payment for the Pan Borneo Highway project is not delayed and is expected to arrive as per the agreement with the work package contractors (WPCs), said Lebuhraya Borneo Utara (LBU).

LBU said this in a statement posted on its website yesterday, following media reports citing Minister of Works Baru Bian as saying that payment for the Sarawak project has been delayed by three months by LBU, which is the development’s project delivery partner (PDP). The works ministry will take over the project in February 2020.

LBU said the alleged delayed July payments for the project are actually not late. “Two of the 10 WPCs have already received payment; the balance WPCs will be paid as soon as LBU receives payment from the government,” it said.

It also pointed out that updates on payments status are a regular agenda in the project’s coordination meetings with government stakeholders. “Even the works minister has been briefed several times on the payment process and status,” said LBU.

LBU explained the payment process begins with the verification stage, which is a thorough and detailed process to check all necessary documents in support of WPCs’ claims before a provisional interim payment certificate (IPC) can be issued by LBU. This IPC will then be sent to government agencies for checking and review, called the certification stage, before the provisional IPC is accepted by the government and payment issued.

With a mega project of this scale in which every work package contract is in excess of RM1 billion, the monthly claims are large and many in numbers, said LBU.

Hence, there are often cases where corrections or amendments have to be made. “This can delay the government’s certification of the interim IPC,” LBU noted.

“Governance dictates that all claims have to be checked carefully to ensure that what is paid is really for [the] works done on the ground,” LBU noted.

Moreover, when it comes to disbursing payments to the WPCs, LBU said it has successfully cut down the process to just one day upon receiving payment from the government, from the previous seven days.

“After all, it is in everyone’s interest that our WPCs get paid fast, in recognition of the project’s progress,” LBU added.

“For any public project which involves taxpayers’ money, such as Pan Borneo Highway, we have an obligation to make sure that every single ringgit spent is accounted for,” said LBU chief executive officer Safuani Abdul Hamid.

“It is our duty to comply strictly to this elaborate governance process as we hold the responsibility to deliver the project in a transparent and accountable manner,” he added.

In September, Bian announced the termination of LBU as the project’s PDP, which confirmed a report by The Edge Financial Daily on Sept 6, citing sources, that the government was aborting the PDP model for the project.

LBU is linked to Tan Sri Bustari Yusof. The contract was awarded to LBU in June 2015, when Bustari’s brother Datuk Seri Fadillah Yusof was then the works minister.

The highway is slated for completion by end-December 2021. As at Aug 25, overall actual work progress by WPCs for the 25 sections reached an average completion rate of 45%, with some sections at 55% to 63% completion.