Is The East Coast Highway A Privatised Mystery Wrapped In An Enigma??
 
     Is the East Coast Highway, on which the works minister, Dato' Seri S. Samy
     Vellu, wants work started as soon as possible for fear of rising land values, still a
     privatised project?  The minister is silent about it.  Neither does The consortium
     given the construction, Projek Lebuhraya Timur Sdn Bhd.  The original
     shareholders of this consortium were Malaysia Mining Corporation (MMC),
     Malaysia-Thailand Berhand, and UEM.  Jurutera Perunding Daya, The consultants
     and project managers, made unrealistic traffic and cash flows projections. But
     UEM and MTB baulked;  their own consultants disagreed with JPD's projections,
     that the ECH could be commercially viable.  Besides JPD wanted project
     management fees of RM400 million, which did not include design and other
     ancilliary fees.  UEM and MTB baulked;  the project management cost of the
     North-South Highway from Kangar-to-Johore Bahru was only RM150 million.  And
     the banks would not fund it.

     The project collapsed.  It is now revived with the same project manager and the
     same consortium.  Neither UEM nor MTB is prepared to be in a consortium to build
     it if it is to be privatised.  Nor are there new partners.  The ECH would become
     yet another white elephant as many privatised projects are.  But the sudden
     interest of the project managers and the works minister suggests a new
     configuration.  Has the government decided to fund the project? Curiously,
     though the route has not been fixed, JPD has advertised for prequalification of
     contractors for an unnamed highway project, which almost certainly would be the
     ECH.  If it is, how is that possible?  Kuala Lumpur, according to the Pahang mentri
     besar, has not formally requested the state government for the land.  How could
     pre-qualification tenders be called when the project plans are still incomplete?

     No one is talking.  The ECH is, as Winston Churchill once said about the Soviet
     Union, a mystery wrapped in an engima.  The ground rules have changed.  If it is
     now a government project, PLTSB does not have prior claim to construct it.
     That ended when it would not earlier.  If the government is funding it, it must
     state that -- and publicly. There is no hurry to build it, especially when it can be
     under proper guidelines for far less than PLTSB could ever build it.  The public
     must be told why this highway is needed at this time, when a strategic widening
     and straightening of the present road would be more useful, less costly, more
     practical.  If it must be built, the contractor must be chosen in a fresh open
     international tender, with the tender awarded, as in the past, to the lowest
     bidder but with the all-inclusive price capped at a price perhaps three times what
     it was in 1982.

     PLTSB's projected cost of the 338 km ECP is RM4,000 million, or more than RM100
     million per kilometre.  (To put this in perspective, we are now told to believe that
     five prime ministerial residences could be built in Putra Jaya for every kilometre
     PLTSB constructs)  This compares with the construction cost of the 60km
     Seremban-Ayer Keroh road in 1982 at RM4 million per kilometre and the Ayer
     Keroh-Pagoh road the next year at RM3.7 million.  The Sungei Besi stretch this
     year cost more than RM50 million per km.  And the minister now tells us the ECH
     would exceed RM100 million per km.  Why has highway construction costs, but
     not other construction costs, escalated 25 times in 17 years when cost of
     material has barely doubled during this period?

     Highway construction cost could not have jumed this high.  If the government
     continued to build highways under the guidelines of the Malaysian Highway
     Authority, with competitive and transparent international tenders according to
     World Bank or Asian Development Bank guidelines, with the lowest tenderer
     getting the project, prices could have been kept low.  If the ECH is a privatised
     project, the government should let it build and reap the consequences of that
     building.  It should be a commercial decision in which the government does not
     intrude.  Especially as it would run into unacceptable losses, as every privatised
     project has.  If this is a government project, its construction must go back to
     status quo ante, with fresh tenders called, with a tight check on
     cost-per-kilometre in keeping with current tendered prices.  One highway
     construction contractor says he could build the ECH for less than RM500 million,
     provided the land is made available.  Dato' Seri S.  Samy Vellu is getting the land
     for the project anyway.  He should first come out clean and state whether the
     ECP is a privatised or government proejct, and then explain why it costs eight
     times more than what is a more realistic figure.  Until then, it should not be built.
     The minister's sense of urgency and the need for this highway now is, frankly,
     disbelieved.

     M.G.G. Pillai
     pillai@mgg.pc.my