Tuesday, March 10, 2009

Water Transfer Tunnel-At Last, The Award

It has been quite disgusting to see the political development in Perak, and the scenario is becoming more like a circus, with all the politicians to be like clowns. The scenario managed to put me into hibernation for quite a while. It is not my intention to write further on this and become part of the circus. Let's discuss a more 'serious' issue.

At last, the much-talked about Interstate Water Transfer Tunnel project is likely to be awarded to the lowest bidder, the consortium of Shimizu-Nishimatsu-UEM and IJM with their bid of RM1.31 billion. The fund for the project is from Japanese loan under the Japan Bank for International Cooperation (JBIC), and understandably the award will go to a Japanese-led consortium. I was told by one of my friends in a major construction company in Malaysia that his company was not even pre-qualified for the tender, which specified that the tenderer should have completed a certain length of tunnel as a pre-qualification for tendering. But knowing the company myself, which has successfully completed one of major tunnelling projects in Malaysia, I am quite confident that it would be able to finish the project (with minimum participation from foreign experts) if given the opportunity and trust by our government. Sadly, I think we were obliged to award the contract to a Japanese company.

As reported by media, the lowest bidder submitted a conditional bid which specifies that the consortium would be compensated if it encounters rock strength higher than estimated. It is reported that negotiation is still ongoing for the consortium to drop the conditional bid. Hopefully our government will succeed in the negotiation, or the contract should be awarded to the second highest bidder. If not, the government would end up spending more money than expected since a conditional bid is like giving an open cheque to the contractor. In my own experience, the contractual claim for higher rock strength in tunnelling will be no less 30% of the original contract sum.

Let's look at the members of the consortium. It is okay is appoint Shimizu, one of the top three construction companies in Japan. It is also quite understandable if UEM and IJM get the contract as a government-linked company and the third largest Malaysian construction company respectively (even though they will end being sleeping partners only). The major issue here is the presence of Nishimatsu in the consortium. This company is embroiled in high profile corruption cases in Japan and Thailand, and it has been banned from bidding for any public works projects in Japan. I also heard that it has also been banned in Singapore. It should be noted that Nishimatsu was also responsible for the Nicoll Highway tragedy in Singapore in 2004, where a section of the underground wall of Singapore Circle Line MRT project collapsed, killing 4 people. For the incident, it was fined $121,400 and the whole Circle Line project was delayed from 2008 to 2010. One of the reasons cited for the collapse was design errors which led to weakness of the underground wall and its subsequent collapse. It would be a big gamble on our construction safety standards if we were to appoint this type of contractor, and it would be a mockery to our construction standard to appoint a company which has been rejected by others.

Civil engineering developed from military engineering, and I believe that major infrastructure projects should be given to local players mostly for safety reasons, especially for tunnelling projects. As I mentioned in my earlier posting, one of our neighbours use tunnels as part of their civil defence system, and in a conference on a major project in Malaysia, the neighbour even sent their delegates from its Defence Science and Technology Agency. In Malaysia, we do not give a damn on the sensitivity and importance of our infrastructure projects.

I still think that the best solution for the interstate water transfer tunnel is to forgo the Japanese loan and to build it using our own fund, if it is really necessary. All the GLCs should play their roles as part of their collective corporate responsibilities for this initiative.

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