RM1.3bil Desaru Highway “Under-Used And Dangerous”

Published: Tuesday October 25, 2011 MYT 11:44:00 AM
Updated: Tuesday October 25, 2011 MYT 12:11:04 PM

From: http://thestar.com.my/news/story.asp?file=/2011/10/25/nation/20111025115717&sec=nation (accessed 25 October, 2011)

PETALING JAYA: The RM1.37bil Senai Desaru Highway is grossly under-used, “unsatisfactory and a danger to road users,” said the 2010 Auditor-General’s Report.

The report found that the statistics prepared by the Malaysian Highway Authority (MHA), which regulates the project management of the highway, showed that the actual number of vehicles using the highway was less than the traffic forecasted by the concession company (which was approved by the Road Planning Division of the Public Works Ministry in Dec 2001).

The actual traffic volume achievement was only 1.9% of the forecast, for a period of three months in 2009, and 8.3% in 2010.

The 77km highway was intended to link Johor Baru to Desaru tourist areas and reduce the congestion at the Pasir Gudang Highway.

The report said the highway is still considered “unsatisfactory and a danger to road users.”

It said the cost for the land acquisition doubled from RM365mil to RM740.6mil due to compensation payment which had exceeded the market price, high injurious affection and severance payments, and interest payment of 8%, due to payments which were not made in time.

The highway was found not to be in accordance with specifications, resulting in damages to the road surface and endangering road users.

“Although project for package 3 was 100% completed in April 2011, the road surface is undulating and river protection has not been built on the Sg Selat Mendana, Sg Layang, Sg Papan, Sg Semenchu, and Sg Chemaran.

“Revetment protection has yet to be constructed along the Pulau Juling Highway causing soil erosion along the area and pollution to the mangrove swamps,” the report said.

The report also found that the concession company had failed to complete the construction work in accordance to the stipulated period, and the highway maintenance unsatisfactory.

“The concession company has yet to take action to resolve the non-compliance reports issued by the MHA,” the report said, adding that delays in completing the project had resulted in delays for the Government receiving the income of 20% of the profits of the toll collection revenue.

The report then recommended for MHA to review the feasibility studies made by the concession company to ensure that the facts presented are accurate, and to take into account realistic land acquisition costs to avoid unnecessary significant cost increases, and for the concession agreement to be reviewed thoroughly.

In its reply, the Treasury said that although the initial planning had been done thoroughly, the land conversion factor as well as the development order by the state authority had contributed to the spike in the land acquisition cost.

“This is because the Government had to pay a high compensation rate on buildings which had already been built,” the Treasury said, adding that the acquisition cost was first estimated in 2002, while Valuation and Property Services Department (JPPH) had valuated the land based on rates as of Nov 2004, which was higher than in 2002.

“To prevent this from recurring, allocation for land acquisition will be capped for highway privatisation projects.

“If the land acquisition cost exceeds the capped amount, then the additional cost for the land acquisition should be borne by the concession company,” it said.

On the issue of the undulating road surface, the Treasury said that all 15 problematic locations had been identified and the report for the repair work had also been submitted to MHA in a letter dated April 29, 2011. (emphasis added).

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