This article first appeared in The Edge Financial Daily on February 12, 2020 - February 18, 2020
KUALA LUMPUR: The ministry of finance (MoF) has rebutted claims that the total cost of the Sarawak portion of the Pan Borneo Highway project was RM16.5 billion instead of RM21.9 billion as stated by the ministry last week.
Finance Minister Lim Guan Eng had announced last Friday that the government has saved RM3.1 billion or 14% of the project’s total cost following a new funding agreement which has brought down the price tag to RM18.8 billion from RM21.9 billion.
This has however been disputed by Sarawak Tourism, Arts and Culture Minister Datuk Abdul Karim Rahman Hamzah and former works minister Datuk Seri Fadillah Yusof, who insisted that the total cost of the project was only RM16.5 billion.
In a statement yesterday, the MoF explained that the RM16.5 billion is the construction cost alone, excluding other charges included in the previous project delivery partner (PDP) agreement, such as PDP fees, engineering consultancy and contingencies totalling RM5.37 billion.
“It’s important to highlight here that the RM16.5 billion Sarawak portion of the Pan Borneo Highway project approved by the previous government is not the total cost. There are other costs involving the project, which would have to be borne by the government.
“The parties that claim that the project’s total cost actually stands at RM16.5 billion is deliberately trying to create confusion over this matter,” MoF said, adding that the issue should not have been raised given that the reduced cost of RM18.8 billion had been presented to cabinet last year.
Last Friday, Guan Eng said the new agreement, which employs the “conventional” method compared with the previous PDP model, has led to a “significant” reduction in the project’s total cost.
He said some RM5 billion of the total will be borne by the government while the remaining RM11.12 billion will come from DanaInfra Nasional Bhd — a government-owned special purpose vehicle set up to finance the mass rapid transit projects in the Klang Valley and subsequently the Sarawak portion of the Pan Borneo Highway.