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Malaysia

Mudajaya withdraws from Penang undersea tunnel project

KUALA LUMPUR, Nov 11 ― Mudajaya Group Bhd has announced its withdrawal from the proposed undersea tunnel connecting Penang island to the mainland, raising new questions with regards to the project's future.

Mudajaya had in a filing with Bursa Malaysia said that its unit Mudajaya Corp Bhd and Consortium Zenith Construction Sdn Bhd (formerly known as Consortium Zenith BUCG Sdn Bhd) had agreed that it would be difficult to proceed with the obligations under the letter of award and further proceed with the project due to some uncertainties, The Star reported today.

Mudajaya Corp had on December 1 last year accepted the letter of award from Consortium Zenith to undertake the proposed construction of the 7.2km undersea tunnel linking Penang island to the mainland and 5.7km Bandar Baru Air Itam-Tun Dr Lim Chong Eu Expressway for RM810 million.

According to The Star, some issues that are making it difficult for Mudajaya to execute the project include the inability to secure the exact date for the site possession, the uncertainty in signing the construction contract, and insufficient information provided for the project which has resulted in a lapse of time to the timelines in the letter of award.

“Accordingly, it has been mutually agreed that, in the best interest of both parties, Mudajaya and Consortium Zenith shall mutually and amicably withdraw and end each other’s obligations under the letter of award. As such, the letter of award was mutually withdrawn and ended effective from Nov 10, 2017,” Mudajaya said.

It added that the “mutual” withdrawal was not expected to materially affect the earnings and net assets of Mudajaya Group as the group had concurrent ongoing projects.

Last month, Consortium Zenith said there was no urgency to present its feasibility study on the proposed undersea tunnel connecting Penang island to the mainland.

Datuk Zarul Ahmad Mohd Zulkifli, senior executive director of the company partnering the Penang government in the project, had said the construction for the project was planned to start only six years from now.

Construction for the undersea tunnel is supposed to start in 2023 and to be completed by 2027.

The Works Ministry has said it has yet to receive the feasibility studies and detailed design for the undersea tunnel after an 18-month wait.

Works Minister Datuk Seri Fadillah Yusof reportedly said the delay in submitting the reports, that costs RM305 million, was “very unusual” as the project was awarded to the project delivery partner in April 2013.