The saga begins: Penang tunnel developer enters JV with Ewein Bhd

33
1145

The convoluted saga of the compensation-in-kind for building the Penang tunnel continues.

The Penang state government plans to hand over land to the tunnel developer, Consortium Zenith BUCG Sdn Bhd (CZBUCG) as part of a swap deal for building the cross-channel tunnel. And now Consortium Zenith has entered into a 40:60 joint venture with a subsidiary of Ewein Bhd to develop 3.7 acres of that land (Lot 702 at Bandar Tanjong Pinang).

The land is believed to be part of the 110 acres that the Penang state government is acquiring to compensate the tunnel developer. (And that 110 acres is subject to E & O securing all necessary approvals for Phase II of its project.)

Meanwhile, the feasibility study for the tunnel project has barely got off the ground and now the tunnel developer is already moving to develop the land it will receive as compensation. Under normal circumstances, the feasibility study for a project as massive as a cross-channel tunnel should take a couple of years at least.

On 14 December 2013, the state government said it was in discussions on whether to pay Zenith with “Lot 713 or Lot 702”. The value of the land was set at RM1,300 per sq ft for the net development area of both lots, it said at the time

Now, Plot 702 is agreed to be priced at RM133m under the Zenith-Ewein joint venture agreement (indicative market value RM135m). This effectively means Ewein has to pay RM79.8m for a 60 per cent share of the land handed over to Zenith. As Plot 702 has an area of 3.67 acres or 159865 square feet, the value of the land works out to RM832psf. The land is located at a prime sea front location in Tanjong Tokong. (Perhaps the RM1,300psf figure mentioned by the state was based only on the usable land and not the gross area.)

READ MORE:  Why massive land reclamation in Penang is not a great idea

The Zenith-Ewein joint venture agreement was entered into on 24 December 2013, with the joint venture vehicle being known as Ewein Zenith Sdn Bhd. Ewein Bhd’s wholly owned subsidiary Ewein Land Sdn Bhd holds 60 per cent of Ewein Zenith while Consortium Zenith BUCG holds the remaining 40 per cent. Consortium Zenith BUCG is naming Ewein Zenith as its nomineee for the land compensation and will request the state government to alienate the land in favour of the joint venture firm.

Interestingly enough, Zarul Ahmad Mohd Zulkifli is a common director of Ewein Land, Ewein Zenith and Consortium Zenith BUCG and is also connected to Zenith Construction Sdn Bhd, the holding company of Consortium Zenith BUCG, according to an announcement by Ewein Bhd. That makes the proposed joint venture a related party transaction. But the joint venture agreement adds that “it falls under the exemption pursuant to Paragraph 10.08(9) of Listing Requirements, as there are no other interested relationships except as stated above. Notwithstanding this, the Company (Ewein Bhd) will be seeking shareholders’ approval for the Proposals”.

This blog had previously pointed out that on 1 July 2012, Ewein Bhd had announced that Zenith’s Zarul had been appointed director of Ewein Land Sdn Bhd. Since his appointment until the the end of July 2013, Zarul had acquired a direct interest of 13000 ordinary shares of Ewein Bhd and 14000 warrants. On 9 October 2013, Zarul was re-designated as Chairman of Ewein Land Sdn Bhd.

Now check out the share price of Ewein Bhd in recent months:

READ MORE:  'Silent majority' supports Penang mega highway - Really?

Where is the precise location of this land and which property development project is this? I can guess this is not far from the northern end of Gurney Drive. (Is it the City of Dreams project, by any chance, which has already begun collecting refundable booking deposits from potential buyers? The name of the developer for this project has apparently not yet been revealed. At what stage of the project are developers allowed to collect such registration deposits?)

The other question that arises is, can the compensation of land under the swap deal for the tunnel be effected now when the tunnel and land reclamation are still going through the various approval processes? What if, for some reason, there is a delay or failure in the delivery of the tunnel?

While we are on the subject, who is actually paying China Railway Construction Corporation International (CRCC), the main contractor of the tunnel, for the feasibility study and detailed design of the tunnel and how much? How independent can such a feasibility study be? Shouldn’t at least the feasibility study and EIA for the tunnel be completed first before there is any move by the tunnel developer to develop the land it is to receive as compensation?

And how was the tender for the tunnel awarded when the feasibility study has not yet been completed?

Please help to support this blog if you can.

Read the commenting guidlelines for this blog.

33
Join the conversation

avatar
2000
18 Comment threads
15 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
24 Comment authors
alfiePenangPPLDatoOng Eu SoonStylo Logan Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Ong Eu Soon
Guest

The next phase of the feasibility study for the ambitious undersea tunnel linking Penang Island and the mainland is expected to start in January this year, with construction expected to commence in 2016. Until today there is no visible activities along the Gurney drive coastal areas. State Works, Utilities and Transportation Committee chairman Lim Hock Seng (DAP-Bagan Jermal) said the state government would “pay” Consortium Zenith BUCG Sdn Bhd, which carried out the processes, with a plot of land either Lot 713 (2.31ha) or Lot 702 (1.48ha) in Bandar Tanjung Pinang, Tanjong Tokong. The total land size that will be… Read more »

alfie
Guest
alfie

Having known Zarul, I can say this Zarul’s saga will get more interesting as time progresses…

In Zarul’s case don’t SURPRISE if a MINISTER comes up in the open NOW and declare that HE too is also into doing Business.

PenangPPL
Guest
PenangPPL

lol relax i know the company boss. trustworthy la

Dato
Guest
Dato

Feasibility study needs$… And where is the money coming from? City of Dreams!

Ong Eu Soon
Guest

Meanwhile, the feasibility study for the tunnel project is near completion when it has barely got off the ground.

Datuk Seri Y.B. Loh
Guest
Datuk Seri Y.B. Loh

Thank you DAP!!!

MPPP/OSC/PS(407)/13 : PELAN PRA – HITUNGAN UNTUK CADANGAN PENYERAHAN SEBAHAGIAN TANAH LOT 10010, SEKSYEN 1, BANDAR GEORGE TOWN, DAERAH TIMOR LAUT, JALAN BIGGS, PULAU PINANG. oleh TETUAN EWEIN RESOURCES SDN. BHD. di Majlis Perbandaran Pulau Pinang

Phua Kai Lit
Guest
Phua Kai Lit

Mr Anil and blog readers,

Can I bring your attention to these articles:

http://newint.org/blog/2013/12/24/best-magazine-articles-2013/

SunnyOoi
Guest
SunnyOoi

Totally agree with Kevin above. I support the tunnel project but there is no reason for payment to be made at this early stage.

Rufus Mallu
Guest
Rufus Mallu

So much for CAT from LGE. What a disappointmen!. How can a project be allowed to start when the feasibility studies are not completed? The basic element is already breached!

Aisay man
Guest
Aisay man

I believe that 3.67 acres land of lot 702 is supposed to be the first payment for the so-called “feasibility survey and various designs of the whole project”. That was once (sometime back) mentioned by Lim Hock Seng (DAP steward) regarding the high cost of preliminary stage of plannings could even amounting to a few hundred millions !

tunglang
Guest

Swap deal is the convenient exchange of state land for high-end development, costing millions to billions at the expense of opportunity costs of sustainable projects which can benefit Penangites irrespective of class status. Swap deal put a proponent at a disadvantage due to desperation for development fund which the other party either can truly provide or coyly agree to finance but from upfront unethical, arm twisting deals which the desperado can close both eyes. We will see more of such swapping which is not too different from wives-swapping parties. Both sides get the satisfaction behind sound proof walls & green… Read more »

damien
Guest
damien

While nothing is free nowadays, McDonald’s offer free coffee at breakfast time nexr Monday. Maybe Anil and readers can gather at one McD outlet ib Penang for breakfast talk while sipping free coffee?

damien
Guest
damien

Anil
No harm gathering for free coffee, right?

About time for you to expand your scope to organise kopi talk session with your ardent readers starting in 2014. This will made their voices louder for LGE’s attention.

If not at McD, then perhaps Mr Tunglang can name a kopi tiam convenient for all. I think some readers can sponsor the duit kopi.

Stylo Logan
Guest
Stylo Logan

A good suggestion by Damien.
Perhaps Anil’s readers can only talk big under the protection and secrecy of pseudonyms?

calvinsankaran
Guest

Well, there are unending questions on this project and the moment anyone questions the CM, he goes on a rampage to attack and undermine the critic with venom. I have a few points to raise. – why start the project and even allow the developer to start development even before the feasibility is study is done ? What if the feasibility study says the tunnel is NOT feasible ? – why even sign the contract without completing the feasibility study ? All this points to the fact that the feasibility study is a mere formality to tick all the boxes… Read more »

kee
Guest

As far as i am concerned, Yang has lost his mind. I dont bother to read his comments now. I think a person of maturity will not do as Yang did. He used to shred Dr lim chong yu and khor tsu koon, in particular, to pieces but now, he is singing their praises ??? Kevin’s comment is always a balanced one. The way we write/comment show who we are. I find it Pg people are a funny lot indeed, they want traffic woes solved but at the same time they will tell you, no, no one way for certain… Read more »

Kevin
Guest
Kevin

I only try to be objective. In this case, it is clearly wrong to give land to a company before it even starts work because should there be any problems in future, there is no way we can take that land back from the company. They would have developed and sold it off for a profit. LGE knows this and he previously criticised KTK’s admin for giving land dirt cheap to IJM before the completion of one single expressway. To me they are now both guilty of the same thing. I am not opposed to the tunnel, but the way… Read more »

Yang
Guest
Yang

Kee, Are you afraid of the truth or still intoxicated by DAP & LGE. After 1 term we could finally see the devil in disguise not the angel or saviour that many thought it is. And we shall not again be blinded by the devil’s schemes. I think you have been watching too many hokkien drama lately with regards to the LGE letter. Really, you should try better than that.

rui
Guest
rui

Thanks for the missing link to city of dreams. Cheers

OM Saigal
Guest

Looks like Penang will imitate Hong Kong with its never-ending traffic. Perhaps suffering for the locals instead.of benefits for them.. ‘Semua barang naik’ to pay for all infrastructure, I think. Anyone can remember when ‘Barang turun harga’??

Kevin
Guest
Kevin

I too feel it is ridiculous to give the company land before it has even started physical work on the project. I know they have to hire consultants, other professionals and whatnot but I don’t really care. As long as there is no physical progress there should be no payment made and even if payment is made it should not be in the hundreds of millions. I mean if this company which is supposed to be linked to a construction giant in China can’t afford to begin construction without first selling state land, then there is a problem with this… Read more »

Yang
Guest
Yang

And yes many like me also do not realize this before. If we talk of how BN UMNO, Gerakan, MCA etc has benefits cronies after cronies, now you can also see that DAP is also nurturing cronies … As for Penang, I hope that we have a true Penangite like Lim Chong Eu and KTK as CM come next GE. He has already make a mess of the once lovely island. Enough is enough.

Kevin
Guest
Kevin

Yang if you credit Lim Chong Eu I can fully understand. If you criticise LGE, I can also fully understand. But pls don’t make people laugh (or cry) by relating Lim Chong Eu with the other CM of Pg whether he is or was Penangite or not. U and I and everyone knows who caused all the problems in the first place.

Yang
Guest
Yang

In the early days I would have credit LGE but I think he is now worse than KTK if that is what you mean. KTK may be modest and straight forward and LGE can shout but what have his shouting achieved except to create emotion and animosity … As for the governing of Penang earlier after 308 it was quite satisfactory but now savouring to satisfy his cronies at the expense of Penangite. Well KTK I agreed is modest and straight forward but he is not spewing … deceits … Whatever is happening now in Penang will soon be a… Read more »

Yang
Guest
Yang

Alamak RM1300 psf an extra RM100. In book value it has gone up but we have yet to see the tunnel yet. Well in another 8 years from now and wow wow we are giving them land first to UNTUNG UNTUNG money first. After they UNTUNG UNTUNG then they build the tunnel. Is it ingenious or stupid I wonder. And meanwhile our new condo and apartment will be based on RM1,300 psf. New apartment are now selling for up to RM1100 – RM1300 per sq ft. A 450 sq ft suits/soho x RM1200 = 540k, 700 sq ft = 840k,… Read more »

DriedChilli@MadrasLane
Guest

2014 A year of surprises ?
Barang Naik cost of living up up up …
Penang swapping here and there; tourists and new foreign residents to occupy high rise lifestyle condos…..
May be no need Local Plan but Foreign Plan ???

Stylo Logan
Guest
Stylo Logan

TMM is Tahun Melawat Malaysia for rich tourists, but it is Tahun Membeli Mahal for local folks struggling with price hike!