Monday 27 February 2012 Print Send link to friend Zoom In Reset Zoom Out
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  What Others Say
   Updated: 28 Feb 2012 
  A-G halts RM7.1b project qrcode  
  By Terence Fernandez    
  Abdul Gani expresses reservations over terms which favour highway concessionaire    
PUTRAJAYA: The controversial West Coast Expressway has hit a roadblock as the attorney-general (AG) is not signing the legal papers required for the RM7.1 billion project to take off.

It is understood that Tan Sri Abdul Gani Patail is of the opinion the terms of agreement for the project, which has seen its cost balloon, are not in the public interest.

Government sources tell The Malay Mail Abdul Gani had expressed reservations over the terms, which seem to heavily favour the highway concessionaire, WCE Sdn Bhd, a 64.2 per cent subsidiary of Kumpulan Europlus Bhd, although most of the work will be undertaken by IJM, which holds a 22.5 per cent stake in Europlus.

Abdul Gani has put the Economic Planning Unit (EPU) and the relevant agencies and ministries such as the Malaysian Highway Authority, the Finance Ministry and the Works Ministry on notice over his reservations on the 316km-long highway that will link Banting in Selangor to Taiping, Perak, where 224km will be tolled.

“Despite immense pressure to sign the legal documents, the A-G has informed the stakeholders he wants to review the terms of the agreement,” said a source.

It is understood the attorney-general is playing the

“I told you so” card, telling the cabinet ministers and officials recently the RM12.5 billion Port Klang Free Zone (PKFZ) fiasco would not have happened if the cabinet had taken his advice and acquired the land for the project instead of buying it at an inflated price.

The issues he is concerned with over the West Coast Expressway deal include:

* the RM2.2 billion government soft loan to WCE at four per cent interest (starting 2013);

* interest subsidy of three per cent on commercial loans for 22 years;

* the RM1 billion land acquisition cost which will be borne by the government;

* the 60-year concession period revised from 33 years; and

* the project cost rising by RM4 billion.

Europlus, which won the contract via direct negotiation 10 years ago, had announced to Bursa Malaysia in 2007 the cost of building the highway was only RM3.015 billion and the concession period was for 33 years.

Although the original length of the West Coast Expressway was 215.8km, critics claim another 100km do not justify an additional RM4 billion.

“The A-G is also questioning why the concessionaire is getting 70 per cent of the toll revenue when it should be a 70:30 agreement, with the government getting 70 per cent since it is footing the cost of the project,” said another source.

“As the legal adviser to the government, the A-G is obliged to speak his mind. He is reminding the officials that they did not listen to him in the case of PKFZ. This time, he is putting his foot down,” said the source.

Critics have also questioned the logic of awarding the project to Europlus which has no experience in highway construction.

It begs the question why IJM was not given the project, which would reduce the project cost.

Another issue is that Europlus president and chief executive Tan Sri Chan Ah Chye also controls Talam Corporation, which has a blemished record in property development because of a number of abandoned projects.

Last year, the Selangor government launched a RM392 million bailout of Talam’s abandoned projects in the state.

Even before this, the project under the Public Private Partnership Unit (PPPU) of the Prime Minister’s Department seemed to hit a snag.

The PPPU approved the project in principle on April 2 last year on a “Build-Operate-Transfer” basis.

In a filing to Bursa Malaysia on the same day, Europlus said negotiations were expected to be completed within six months from the date of the letter.

Works Minister Datuk Shaziman Abu Mansor had also said the project would start last December.

However, it is obvious that lobbying against the project has delayed its commencement – compounded now by the attorney-general’s concerns that the public interest will be compromised.

Abdul Gani was tight-lipped when contacted.
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