THE RSS
t
he CIA had claimed that it “solid”evidence” that SAMY had USED EXTRA INCOME
TO FINAINCE RSS BRANCH IN CHENAI TO GET PROTECTION
Would anyone sensible award a multi-billion Ringgit mega-contract for the building of a 512 kilometer highway to an engineering cum construction firm that has zero experience in the construction of highways and has never built an inch of it?
Well this someone did all the insensible things above. Not only was the multi-billion Ringgit highway mega-contract awarded to this “zero-experience highway builder” over other experienced highway builders, this someone also had to cough out the initial “almost-interest-free” capital plus stand as guarantor over the massive billion Ringgit loans this “KLSE suspended public company” would have to take in order to complete this mega-project. Additionally, this someone also had to provide written guarantees that the “poor-record-construction-company” would not lose one sen in this venture. To cap it all off, this company is exempted from taxes for the next ten years and the proposed 25 years concession period is extended to 30 years.
Let’s start from the beginning.
In February 1986 the Ministry of Public Works launched a tender exercise for privatizing the construction and operation of the remaining portion of the North-South Highway (NSH). The 867 kilometer NSH was about 41% completed by the Malaysian Highway Authority (MHA) then. Five out of the six pre-qualified companies showed interest, namely Pilecon Engineering Berhad, United Engineers Malaysia Sdn Bhd, Shahpadu Holding Sdn Bhd, Unico Holdings Sdn Bhd and Pembinaan Hasbuddin (M) Sdn Bhd. Of these five companies, only Pilecon and Hashbuddin had the necessary experience building highways and only Pilecon and UEM submitted “conforming bids”. (MBF Holdings Sdn Bhd showed no interest at all.)
The question is why the construction of the NSH is being privatized when almost 41% of it has already been completed by MHA. What is an additional 512 kilometer of highway after building 355 kilometer? The Government’s answers to these questions were (1) It is aimed at relieving the financial and administrative burden of the Government in undertaking and maintaining a vast and constantly expanding network of services and investments in infrastructure; (2) Privatization is expected to promote competition, improve efficiency and increase the productivity of the services; (3) Privatization, by stimulating private entrepreneurship and investment, is expected to accelerate the rate of growth of the economy; (4) Privatization is expected to assist in reducing the size and presence of the public sector and its monopolistic tendencies and bureaucratic support in the economy; and (5) Privatization is also expected to contribute towards meeting the objectives of the New Economic Policy (NEP).
Of the five bids, only 3 were considered. Pilecon submitted 4 alternative proposals ranging from RM3.372 billion to RM3.76 billion. Hashbuddin submitted various alternative proposals with a standard tender of RM3 billion. UEM also submitted various proposals but had the highest bid of RM3.5 billion. Additionally, Pilecon’s tender also only specified a requirement of a RM498 million standby credit from the Government while Hashbuddin needed the Government to provide loan support (to its commercial loans). UEM needed RM1.65 billion from the Government. Pilecon proposed a 7 sen/km toll rate for a concession period of 25 years. Hashbuddin proposed a 5 sen/km toll rate for a concession period of 22 years and UEM once again came in highest at 7.5sen/km toll rate for a concession period of 25 years (extended to 30 years after the contract has been awarded.)
If conforming bids were mandatory, only Pilecon and UEM can be considered and Pilecon would win the tender owing to its lower bid, its proven experience at building highways plus the fact that the company only required a RM498 million standby credit facility from the Government.READMORE CLICK BELOW
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