PETALING JAYA: The Penang Mega infrastructure project, which was awarded to Consortium Zenith Construction Sdn Bhd (CZC), is set to kick off in September this year following the certainty of funding.
Sources said Boon Siew Sdn Bhd, the privately held diversified group founded by the late Penang tycoon Tan Sri Loh Boon Siew, has acquired 22.92 acres of land from CZC at RM845 per square foot amounting to RM843.64mil.
“The land that the Boon Siew is buying is near the Gurney Drive area,” said a source.
According to a valuation report, the land near the Gurney Drive reclaimed area is close to RM1,000 per sq ft.
CZC’s divestment of the land to Boon Siew group marks its first major step to monetise the land to fund the infrastructure projects.
“The Boon Siew group is a big name on the island and has a big balance sheet. Its entry to buy the land will give the land swap-funded infrastructure projects some credibility and certainty in terms of financing,” said a source.
The transaction finally allows CZC to kickstart the RM6.34bil Penang mega infrastructure project, since it was first awarded the job by the state government in 2012.
CZC in turn has awarded the first of the three highway infrastructure packages – which is a 5.7km highway from Ayer Itam to Lebuhraya Dr Lim Chong Eu – to a related company, Vertice Bhd , in September last year for RM815mil.
Works on the first highway project will finally begin on Sept 1 with a major ground breaking scheduled for end-August.
Vertice has a 13.21% stake in CZC while the major shareholder of CZC, Datuk Zarul Ahmd Mohd Zulkifli, has a 9% stake in Vertice. To undertake the highway infrastructure project, Vertice has formed a joint venture with Vizione Holdings Bhd in February this year.
The second phase of the project is a 10.53km highway connecting Tanjong Bungah and Teluk Bahang and will commence in September next year. It is called the North Coastal Paired Road and Vertice is expected to land the project as well.
Previously, the entire project, which consists of a 7.2km undersea tunnel and three highways on the island, have been mired with uncertainty due to a mixture of funding and political issues.
The undersea tunnel, which will have a toll, is between Butterworth and Gurney Drive on Penang island, while the three roads, including the stretch between Ayer Itam, are toll free and meant to disperse the traffic on the island.
The political issue came about as Penang was previously ruled by an opposition party. Now, the state government is part of the coalition that won the mandate to run the federal government which resolves the political uncertainty over the project.
Issues with regards to funding the project arises because the Penang state government was paying CZC mainly through reclaimed land, with some money to come from toll collection. CZC is to divest the land and use the funds to undertake the project.
Of the RM6.34bil for the entire project, RM305mil is for the feasibility study and detailed design of the entire project. The remaining RM6bil is for the construction of three highways and an undersea tunnel.
Toll collection from the undersea tunnel is expected at RM2.3bil while the rest are to come from the sale of land alienated to CZC. The total amount of land to fund the project is 110 acres in the reclaimed areas of Tanjong Tokong and off Gurney Drive.
The reclaimed areas are now called Seri Tanjong Pinang and the biggest developer there is Eastern and Oriental Bhd .
In January 2016, Ewein Bhd ’s 60% subsidiary, Ewein Zenith Sdn Bhd, had been given the right to purchase some of these land.
Back then, Ewein Zenith had been granted the right to purchase three parcels in Bandar Tanjung Pinang for RM2.83bil following a memorandum of agreementwith Consortium Zenith BUCG Sdn Bhd. The price valued the land at about RM1,300 per sq ft. However, as Ewein Zenith could not raise funding to buy those land, it has since waived the rights apart from two plots within the land.
Phase three of the Penang mega infrastructure project is a 4.08km Gurney Drive-Tun Dr Lim Chong Eu Expressway bypass while the final component is the undersea tunnel. The main contractor for the undersea tunnel is China Railway Construction Co.
Phase three is to start in August 2021 and the undersea tunnel in 2023.
http://www.thestar.com.my/business/business-news/2019/07/01/boon-siew-group-in-mega-land-deal/
