Delayed East Coast Highway 2 costs RM800mil more

AUDIT REPORT Delays in constructing part of the East Coast Highway 2 have cost taxpayers a staggering RM800 million, according to the third part of the Auditor-General's Report 2012 tabled in Parliament today.

The amount is one of the largest reported in the report and is more than three times that of the notorious RM250 million soft loan for the National Feedlot Centre project which the auditor-general had exposed in 2011.

The 184km East Coast Highway 2 project, commissioned in September 2006, begins in Jabur, Kemaman, and ends in Kampung Gemuruh, Kuala Terengganu.

It is divided into two parts, one managed by the Malaysian Highway Authority (LLM) and the other by the Public Works Department (PWD).

The PWD-managed portion involves overseeing the building of the highway from Jabut to Bukit Besi and from Telemung to Kampung Gemuruh.

With a length of 120km and a spur road of 19.4km, this was initially projected to cost RM2.09 billion. It was to have been completed in March 2009.

However, delays resulted in the cost of construction material increasing drastically, with the cost of the PWD section ballooning to RM2.9 billion as at last December.

The PWD had divided its part of the project into 16 sections and tendered these out to 12 different companies.

Later, it had to terminate the contracts of eight contractors for failing to complete work on time.

They were Essenvest Sdn Bhd, Zainal@Sharif Ibrahim Sdn Bhd, GPQ-Bukit Putri JV, Koperasi Belia Nasional Bhd, Tidal Marine Engineering Sdn Bhd, Babena Corporation Sdn Bhd, Pembinaan Bukit Timah Sdn Bhd-TSR Bina JV, and Arah Jitu Sdn Bhd.

Heavy cost overrun

Work on the affected sections was then re-tendered at a higher cost, recording delays ranging between 11 and 19 months.

As at April this year, only nine of 16 parts of PWD's section of the highway had been completed.

The report notes that this section, initially cheaper than LLM's section to build, is now more expensive.

Based on the initial tender price, the cost of the package managed by the PWD was to have been lower - RM11.33 million per kilometre compared RM18.68 million per kilometre for the LLM section.

"However, as at April 2013, due to rising cost of construction materials and delays by PWD, the estimated cost had increased to RM17.68 million per kilometre compared to LLM's RM17.64 million per kilometre," says the report.

LLM was tasked with supervising construction of a 64m stretch of the highway from Bukit Besi to Telemung, as well as the 16km Bukit Payung spur road, at a cost of RM1.4 billion.

LLM had awarded the contract for its entire section to a single company, Syarikat MTD Capital Bhd, through direct tender.

The company completed that section on May 18, 2012, albeit also with long delays, as the project was to have been completed on March 17, 2009.