KUALA LUMPUR (Oct 29): The federal government paid RM155 million in compensation to Borneo Highway PDP Sdn Bhd (BHPSB) following the termination of its project delivery partner (PDP) agreement for the Sabah Pan Borneo Highway project seven years ago.

The payment was a one-off settlement to resolve BHPSB's disputed claims after the Cabinet, then led by Pakatan Harapan, decided on Dec 19, 2018, to terminate the agreement on the grounds of national interest, Works Minister Datuk Seri Alexander Nanta Linggi said.

“A termination notice was issued on April 22, 2019, with the agreement ending on Sept 22 that year,” he said in a written parliamentary reply to Isnaraissah Munirah Majilis (Warisan-Kota Belud) on Wednesday (Oct 28).

BHPSB was appointed in 2016 by the then Barisan Nasional-led federal government as the PDP for Phase 1 of the 706km toll-free Sabah portion of the Pan Borneo Highway.

Following the change of federal government in 2018, the project was shifted back to the conventional contracting model, with the Works Ministry taking over its implementation.

BHPSB is 60%-owned by Warisan Tarang Construction Sdn Bhd, with the remaining 40% held by a joint venture between UEM Group and MMC Corp Bhd. Warisan Tarang has been linked to current Sabah Governor Tun Musa Aman.

Nanta said the federal government had paid RM700.99 million to BHPSB for its role in managing Phase 1 of the highway project before the PDP agreement was terminated.

Of the total, RM66.92 million, inclusive of tax, was paid in management fees, while RM634.07 million covered reimbursable expenses, he said.

The management fee was calculated at 5.5% of progress payments to contractors for the project's work packages. Reimbursable expenses comprised RM146.39 million in operating costs, RM16.64 million in capital expenditure, RM448.36 million in consultancy fees and RM22.69 million in goods and services tax (GST).

Notably, the latest Auditor-General's report showed that the highway project, originally scheduled for completion in December 2021, remained incomplete as at March 31, 2026.

Only four of the 35 work packages, with original contract costs totalling RM567 million, had been completed, while the remaining 31 packages, representing 88.6% of the total, were still in progress. These packages were valued at RM16.319 billion.

The delay has also pushed up the projected total cost of Phase 1 from RM17.91 billion to RM18.96 billion.

Read also:
Pan Borneo Sabah Phase 1 costs escalate by over RM1 bil, remains incomplete after a decade — AG's report
‘Govt takes over Pan Borneo Highway, removes PDP’
MMC confirms BHP’s termination as PDP for Pan Borneo Sabah

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