Missing RM1.3 billion for the Penang Second Bridge.

by Richard Teo

History has an uncanny way of repeating itself. During Mahathir’s tenure as PM the construction of the North-South Expressway in 1984 was awarded to UEM (owned and controlled by UMNO) on the basis of a design-build-finance and operate concept.

Although the lowest tender bid was $3.2 billion, UEM was awarded the contract. Prior to completion,construction costs escalated to a phenomenal $6 billion. The escalated cost which normally would be borne by the turnkey contractor was underwritten by a govt soft loan.

This effectively meant that a competitive bid for a project which would cost $3.2 billion ended costing $6 billion. Presumably,the toll collection period had to be extended from an initial 15 years to 30 years to accomodate the doubling of the project cost.

The burden for the extra cost was shifted to the road users who now have to content and endure the paying of road toll for an extra 15 years (1988-2018). Later, in exchange for changing the increase in toll rate from every year to every three years, the concession period was further extended for another 12 years(2018-2030).

Had the contract awarded to the lowest bid at $3.2 billion was accepted, the govt would have saved $2.8 billion (or a shorter toll collection peiod of 15 years).

However, with its questionable practice of awarding the contract to a dubious company closely associated wih the ruling UMNO party, the ordinary citizen is bogged down with an additional period of 27 years to pay for the usage of the North-South Expressway.

Come 2007 and the cycle is about to repeat itself again with the award for the construction of the Penang second bridge. There was no tender for the project and it was speculated the bridge would cost RM2.3 billion. However, even before it got started, NST June 24th reported that the bridge would now cost RM3 billion.

On 11th July, the star reported that Malaysia would secure a loan of RM1.7 billion (US$500 million) from China for the construction of the Penang second bridge. This latest revelation demands some explanation.

Is the total loan of RM1.7 billion from the Exim bank of China represent the actual total cost of the second bridge? If it is then why was it touted by the govt that the bridge would cost RM3 billion?

Or like the NSE Expressway, the additional RM1.3 billion would eventually be structured as escalated cost to be indemnified to UEM?

When the RM1.3 billion is added to the actual cost of RM1.7 billion, the total cost of RM3 billion will be factored in as the total construction cost for the Penang second bridge. This RM3 billion will be the benchmark for determining the toll collection period extended to the concessionaire.

It was reported in the media that UEM would soon be signing a joint venture agreement with China Harbour Engineering Company (CHEC) to build the second Penang bridge. For the sake of transparency and accountability it is incumbent upon the the govt to fully disclose the nature and substance of the joint-venture agreement between the two parties so as to ensure that the Malaysian public is fully aware of the total construction cost of the second bridge.

The disclosure of the actual cost is of paramount importance because it will determine the toll collection period that will be extended to the toll concessionaire. An artificial and inflated cost would only mean extending the toll collection period to an unreasonable time frame and consequently will cause additonal financial hardship to users of the second bridge.

  1. #1 by Joetan on Saturday, 14 July 2007 - 2:39 pm

    This is the fine example of how the cronies of UMNO benefited from the so called NEP(Never Ending Policy). No tender has been called even though that is a mega project. Our Semi Value refuse to be transparent on the toll agreement. Toll concession period can be extended at their whim. Whenever other races or other countries eg the ambassador of EC brought up the issue of competitiveness the big bullies(top gun) in UMNO who gain so much from the policy will shot them down. They will not hesitate to wave their keris to put fear into the heart of other races who dared to question the so called NEVER ENDING POLICY. This is how bolehland is being run.

  2. #2 by tidaknama on Saturday, 14 July 2007 - 3:14 pm

    I don’t understand why we can spend billions to buy submarines, fighter jets, send a space tourist to space to make teh tarik, build a holiday sports center in London..etc…so why don’t we have 3 billion to build a bridge? I though it would be chicken feed in comparison to the amount wasted on other mega projects. Thus I was astounded that we had to borrow money from China to do it. Being a Penangite, I think the bridge is a good thing, but borrowing so much money to build it is not a wise thing.

  3. #3 by madmix on Saturday, 14 July 2007 - 3:30 pm

    Actually who is borrowing the money: UEM or the government. I though some time ago it was revealed that UEM go the contract but sub-contract it out to a china company for a much lower price than contracted, pocketing the difference. So now we have a PRC company building the bridge and a PRC bank financing it and we have UEM doing nothing except skimming the top and later collect toll to pay off the loan.

  4. #4 by Daniel Quah on Saturday, 14 July 2007 - 3:42 pm

    the higher cost of building the bridge will further burden the RAKYAT but enrich the Umno ..why all the complaint vote them out from PENANG this coming GE…i sick of them, playing racial card, Ketuannan Melayu, NEP…when this gonna stop? until Malaysia become another Indonesia? …

  5. #5 by fido on Saturday, 14 July 2007 - 3:42 pm

    Publish the financial numbers to the public BEFORE election if they dare, else the public can already guess what the answer is!

  6. #6 by fido on Saturday, 14 July 2007 - 3:47 pm

    When we started the 1st bridge, due to lack or no planning, we built the bridge too small and too late. Thus now the public have to suffer the consequences of the so called expansion of the 3rd lane (see how bad was the jam last night!!).

    Now with the 2nd bridge, again, where are the planning numbers to show that 2 lane each way would be sufficient for the bridge to cope with the traffic for the next….er….50 years??

    Another serious error in the making that’s going to be the biggest blunder to the never ending traffic jam on the bridge??

    Who is accountable for this planning??

  7. #7 by blastmeister on Saturday, 14 July 2007 - 9:15 pm


  8. #8 by Toyol on Saturday, 14 July 2007 - 9:58 pm

    If our economy is as good as they say, why borrow 3 billion? From China???!!! An open economy borrowing from the communist. Real embarassing, and we thought we were a developing country. Let Chin Peng come home!

    The bridge will not cost 3 billion…not from the looks of it. Judging from the 1st bridge, the cost will be 3 times higher. Belive me, I have worked long enough in the industry to know. Elections is coming…so money is needed to buy votes.

    Looking at this episode, I can only conclude that our nations coffers are dried up. Where has all the oil money gone? We have been raped, raped and raped again and again. Our children will have nothing left. Perhaps as security for the loan, we have collateralised our country! Er, who are the patriots again?

  9. #9 by twistedmind on Saturday, 14 July 2007 - 11:46 pm

    I heard this on the news on 13th June 2007:

    It was reported that 63,000 vehicles use the Penang bridge daily.

    Doing the math:

    63,000 x RM7 toll = RM441,000 daily (lowest, as what cars pay)
    441,000 x 365 = RM160,965,000 a year
    Opened in 1985 Sept, that makes it about 12 years

    160.9 million x 22 years = RM3,541,230,000.00 (you need a big calculator)


    The Penang Bridge
    The Bridge was built by the Government at a total cost of RM800 million (excluding the cost of land acquisition). With 3 interchanges, the 13.5 km Penang Bridge of which 8.4 km is above water was officially open to public on 14 September 1985. It has 533 spans of which 192 spans for the Bridge is above water.

    Disclaimer – I took the toll charges on a flat current rate (as opposed to increasing – to be fair, the toll was cheaper earlier), and heavy vehicles which are charged between RM12-RM75 per trip at current rate. Also, the number of users increased over the years, that too is taken at current rate only.

  10. #10 by fido on Sunday, 15 July 2007 - 12:28 am

    Well done!! They can always quote lower first…er…since election is coming…paint a very nice picture, after that…er….due to inflation, the price has now gone up 3x, project delayed, need to gt more funds. That’s the way bolehland!

  11. #11 by dawsheng on Sunday, 15 July 2007 - 12:29 am

    “So now we have a PRC company building the bridge and a PRC bank financing it and we have UEM doing nothing except skimming the top and later collect toll to pay off the loan.” madmix

    This is so called Abdullah’s PFI wonders.

  12. #12 by democratic junkie on Sunday, 15 July 2007 - 1:00 am

    Maybe as part of the deal, Malaysia gets to borrow at a cheap rate. Or maybe our coffers are empty…..hahaha.

  13. #13 by Sense of Belonging on Sunday, 15 July 2007 - 12:59 pm

    No respect to the Malaysia Government with their incapability for future planning……
    WTF is Pak Lah taling about another 100 years planning?
    Current issue already not clear and he want to talk about another 100years?
    Or maybe this a a way for people to remeber him longer since
    Mahatir got Vision 2020 and this is his vision…. so Pak lah is more clever… come up with 100 years more vision….
    Next PM…. 1000 years vision…. It a joke…….setting pratical vision of course is reasonable with condition tackling current issue correctly…

  14. #14 by Billy on Sunday, 15 July 2007 - 2:13 pm

    I believe the question we should pose to UMNO is – where is the RM4.5b that was saved from the increase in petrol prices last year? We were told that it was meant to improve transportation and infrastructure. Then shouldn’t this money saved be spent on the bridge “infrastructure” or has someone pocketed the money????

  15. #15 by Jonny on Sunday, 15 July 2007 - 2:56 pm

    What is UEM doing? Shuffling papers and paying out commissions to other ‘consultants’?

  16. #16 by shortie kiasu on Sunday, 15 July 2007 - 3:44 pm

    This is a case of “Power corrupts, and absolute power corrupts absolutely”. UMNO is the government, other so-called component parties of the Barisan Nasional are just dummies, stooges & puppets.

    What UMNO wants, goes; no questions. No parties can shake them.

    The people knows about it. What democracy to talk about. Yes, Barisan Nasional is made up of all “races”, but, in actual fact, people knows full well that UMNO is synonimous with Barisan Nasional. The rest are just joining the bandwagons and enjoy their personal positions and wealths accrued therefrom to keep their mouth shut.

    Barisan Nasional Policies is the UMNO Policies, like Muhyddin said, non-UMNO parties should expound the immense benefits of NEP to the country and to the people of all races. The stooges are dumbfounded!

    They know full well that who derived benefits immensely and who are deprived to be pauper at all times.

    If the stooges themselves are not conviced, how could they be canvassing to their constituents of the praises of NEP to the non Malays? The stooges will be literally lynched.

  17. #17 by ihavesomethingtosay on Sunday, 15 July 2007 - 10:22 pm

    If IDR is being sold to Singapore, then Penang is likely to be sold off to the Chinese as Mr. Wen Jia Bao prefers Penang’s Char Kuey Teow to Nasi Kandar.

    Tak Malu ke? last UMNO GA, want to stick little bent knife into non bumis, and now wants to borrow from the pendatang’s ancestral country? does the gomen knows no shame? why not borrow from Indonesians and Philipinos? afterall, they should show gratitude as we give them PR status cheap.

    Why borrow? when our trade figure is one trillion? why why why???

  18. #18 by k1980 on Sunday, 15 July 2007 - 10:42 pm

    I am sure the malaysian public, especially those from the urban educated middle-class, knows exactly how the bn govt is robbing the country blind. But why, why, why do they keep on voting for bn candidates in general elections. Surely these educated fools know that a vote for mca, mic, gerakan, ppp means a vote for the continuation of the NEP? I believe this was the reason Pol Pot sent the urban educated middle-class of Cambodia to the killing fields from 1975-79.

  19. #19 by Toyol on Monday, 16 July 2007 - 9:16 am

    The govt did save RM4.5b from the withdrawal of petrol subsidies. They also told us it wold be used to improve the city’s transportation system. What happened? Within 2 weeks of that announcement, PM said that it was already spent! Where? Remember that around that time, MAS had a big hole in its balance sheet amounting to also RM4.5 billion! Coincidence?

  20. #20 by Jonny on Monday, 16 July 2007 - 10:39 am


    Precisely your points. We do not vote them back in. They have created lots of ghost and support voters. Cheap voters, who were given the MyKad easily. That is the reason they win big EVERYTIME.

    If you do not believe, just go to Jabatan Pendaftaran Negara. Request for change of address. You will be surprised. They do not need any other validation of your new address.

    So easy to transfer voters en masse right? Also much more easier by re-drawing consituencies.

    That is the reality.

    Hard & Harsh.

  21. #21 by shiock on Monday, 16 July 2007 - 12:20 pm

    When Bodohwi came into power, he declares that all contract will be tendered out for transparency. So still in dreamland after 45 months.

    What kind of transparency and accountability that he is talking about???
    NO – revealing the contract docs of all highways concession.
    NO – action against the IGP
    NO – action against the Klang satayman
    NO – action against the AP Fat Lady
    NO – action against the “high performance” sports center fiasco

    The list will go on and on but what we can do to correct it???

  22. #22 by pwcheng on Tuesday, 24 July 2007 - 4:09 pm

    After encountering all these blatant abuses by the Government with UMNO at the helm, and still nothing much can be done about it, where are we heading to???

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