Penang’s ‘Samy Vellu tunnel’ hits a road-block

This is what happens when you do things upside down. Zenith PMC Sdn Bhd has terminated its joint venture agreement with Astral Supreme Construction Bhd to conduct a feasibility study for the controversial tunnel after the latter failed to secure consultants to carry out the study.

In the first place why award the feasibility study to a third party which then has to find external consultants for the project? Someone was going to make some guaranteed profits here. Alas, for them, it wasn’t to be.

More importantly, an independent feasibility study for the tunnel should have been done before any award of tender. This is what happens when you do things the wrong way around.

And crucially, is the tunnel even necessary in the first place. Remember, the ‘independent’ consultants for the Penang Transport Masterplan only included the tunnel into the masterplan because that was what the state government wanted, and even then the consultants indicated it was not an immediate priority. It was something to consider for 2030.

Anyway, why do I call it the Samy Vellu tunnel? The idea for a northern link in Penang that would include a tunnel came in 2001, as declared by then Works Minister Samy Vellu. (Perhaps it failed to take off because someone was eyeing vast land banks in Batu Kawan for a southern link, which would go on to become the second Penang Bridge.)

Back then I wrote for Aliran:

In the long term, the state should be looking at more sustainable transport modes, including Light Rail Transit systems (on both the island and the mainland) with cross-channel links (high-speed passenger ferries, hovercraft, or even an LRT link). Constructing new ferries and running a vastly expanded ferry service would provide hundeds, even thousands of new jobs in Penang.

Why copy an idea from someone like Samy Vellu? Surely, we can come up with more progressive and sustainable transport solutions for Penang.

In the first place, is a road tunnel even a priority when we do not even have a cross-channel rail link?

For the record, here are the announcements made by Astral Supreme:

25 July 2014:

Reference is made to the announcement dated 15 August 2013 in respect of the Joint Venture Agreement dated 15 August 2013 (“JVA”) between Astral Supreme Construction Sdn Bhd (“ASC”), a wholly-owned subsidiary of the Company and Zenith PMC Sdn Bhd (“ZP”) to jointly manage, perform and carry out the Feasibility Studies and Detailed Design Stage of the project known as “Projek Pembinaan Jalan-jalan Utama dan Terowong di Pulau Pinang”, involving the proposed construction of various roads in Penang and an undersea tunnel between Penang Island and Seberang Perai (“the Project”).

The Board wishes to announce that ZP vide its letter dated 11 July 2014 had declined ASC’s appeal to defer the implementation of the JVA until November 2014 due to unreasonable delay which is in breach of clause 10.1 of the JVA which states that the works shall be completed within thirty (30) months from the date of JVA. Further, clause 12.4 of the JVA stipulates that time wherever mentioned in the JVA shall be of the essence. ASC failed to remedy the breach within fourteen (14) days from the date of the letter. Accordingly, the JVA was terminated and rendered null and void with immediate effect. With the termination, neither the parties shall have any further claims against each other in respect of the JVA.

Save for Mr Wong Kwai Wah who is the Executive Director of ASupreme and Non-Executive Director of ZP, none of the Directors or major shareholders of the Company or the persons connected with them, has any interest, direct or indirect in the transaction. The termination will not have any significant effect on the earnings or net assets per share of the Company for the financial year ending 31 December 2014.

15 August:

Further to our announcement dated 25 July 2014 in connection with the termination of the Joint Venture Agreement (“JVA”) between Astral Supreme Construction Sdn Bhd (“ASC”) and Zenith PMC Sdn Bhd (“ZP”), the Board of ASupreme wishes to inform that since the signing of the JVA on 15 August 2013, ASC was unable to find consultants who could undertake the project within the budget and the funding requirements. ZP has to meet the milestones set by the Penang State Government in regards to the feasibility studies and design for the project. ASC’s appeal for further delay in the commencement of the project was declined by ZP and hence the termination. With the termination of JVA, ASC shall not be able to derive contributions from the guaranteed profit under the JVA as announced on 15 August 2013.