THE withdrawal of minority shareholder Beijing Urban Construction Group Co. Ltd (BUCG) from the consortium building Penang’s controversial tunnel and highways projects was purely a corporate decision, Consortium Zenith Construction Sdn Bhd (CZC) said today.

The principal contractor, in its first press statement since being investigated by the Malaysian Anti-Corruption Commission (MACC), said it remained committed to the project and that the withdrawal does not impair its financial and technical strength.

It said Zenith Construction Sdn Bhd had always been the single largest shareholder of the consortium, which had won the open tender to undertake the RM6.3 billion project in 2013.

It was then made up of different companies, including Chinese firm BUCG which exited the consortium in 2016 following a fatal accident at one of its construction sites in Kuala Lumpur.

The DAP-led Penang government has been attacked, in particular by Barisan Nasional’s lead Chinese party MCA, over the undersea tunnel project which the state says is aimed at easing traffic congestion.

CZC said it was awarded the project via an open competitive tender by the Penang government after “satisfying a stringent set of pre-qualifying criteria” and the submission of a detailed request for proposal (RFP) to the Penang Tender Board.

“Any decisions, arrangements and changes made by CZC after the award of the project are purely based on commercial reasons, and within the provisions and obligations set forth in the preliminary agreement signed between CZC and the Penang government.”

The consortium reaffirmed its commitment to go ahead in building the highways, which had recently obtained EIA (environmental impact assessment) approval.

“The completed FSDD (feasibility studies and detailed designs) and DEIA (detailed EIA) works for the three major roads is testimony to the fact that CZC has the financial and technical strength to deliver.

CZC also said its paid up capital had gradually increased since its incorporation as a special purpose vehicle for the project.

“The paid up capital of the SPV now stands at RM26.5 million, which is well capitalised to undertake the RM305 million preliminary works of the project.

“CZC takes cognisance of the fact that its capital funding needs to be adequately increased at the appropriate time as the project enters into the construction phase. This has always been part of CZC’s financial planning.

“Over-capitalisation at this stage would unnecessarily tie up CZC’s funds,” the consortium said.

To conduct the FSDD and DEIA for the project, CZC said it engaged local and foreign consultants across multiple disciplines to handle the project’s different components.

“CRCC Malaysia Bhd is also one of the many consultants engaged to carry out design works of the project, including the undersea tunnel.”

CRCC Malaysia is the subsidiary of the China state-owned China Railway Construction Corporation.

CZC said from the time of the RFP submission until now, CRCC Malaysia remained as the engineering, procurement and construction (EPC) contractor.

The consortium also reiterated that it had received no payment for the tunnel component.

“Although the feasibility studies for the undersea tunnel project is now at its advanced stage of completion, no exchanged lands have been alienated or payments in whatsoever forms have been made by the Penang government to CZC.

“Barring any unforeseen circumstances, the construction works for the undersea tunnel is targeted to start in 2023 and scheduled for completion in 2027,” the consortium said.

CZC also said it had and would continue to give its full cooperation to MACC to help its investigation.

“CZC has full confidence in the professionalism of the MACC to complete their investigation in due course.” – February 26, 2018.