Source: Financial Daily, December 5, 2007
By : Sharmila Ganapathy

Kuala Lumpur: The decision on the pre-qualification round for bids on the first package of the inter-state raw water transfer project from Pahang to Selangor involving the construction of a RM3 billion tunnel did not entail any preferential treatment of parties, said Energy, Water and Communications Minister Datuk Seri Dr. Lim Keng Yaik.

"It (the short listing) was through pre-qualification. There is no 'pilih kasih' (preferential treatment)," he said, confirming The Edge weekly re-port that four Japanese-led parties, two of which have Malaysian part-ners, had successfully pre-qualified for the RM3 billion project.

He also said eight parties had initially bid for the project. "Out of the eight there were four Japanese and four Chinese companies and of the eight, the four Japanese pre-qualified, while the others did not," Dr Lim told reporters here yesterday after officiating at a signing ceremony between Tune Talk Sdn Bhd and Celcom (M) Bhd here.

He, however, declined to name the companies or provide timelines on when the government would arrive at a decision.

Citing industry sources, The Edge weekly reported in its latest issue that a consortium comprising Gamuda Bhd and China Railway Engineering Corp had been nudged out of the bid for the raw water transfer project during pre-qualification stage.

Another consortium involving WCT Engineering Bhd, MTD Capital Bhd and China's Sinohydro Corp had also failed in the pre-qualification found, the weekly wrote.

The report also said preference for Japanese companies was due to the funding received from the Japan Bank for International Cooperation OBIC) through a low-interest soft loan.

In 2003, JBIC agreed to provide a ¥82.4 billion (about RM2.51 billion) loan for the project under the New Miyazawa Initiative, a plan introduced by the Japanese government to assist ailing Asian economies after the 1997/98 financial crisis.

But according to industry players, although the interest rates are low on paper, the capital expenditure for the project is high, making it a costly affair.

Some industry players suggest that the tunnelling works could be done for about RM2 billion, The Edge weekly said.

The report added that the com-panies who made it through the prequalification round were Japanese firm Taiseh Corp (which has partnered with privately-held HRA Teguh Sdn Bhd) Japanese construction firm Shimizu Corp (partnering UEM Group) and two other Japanese firms Kajima Corp and Obayashi Corp. The report said that Shimizu may include IJM Corp in its consortium.

Officials from both Kajima and Obayashi told TheEdge weekly that they did not rule out the possibility of signing up a local partner at a later date.

At the event yesterday, Dr Lim added that the project, which involves the building of a 44 km-Iong pipeline from Pahang to Selangor, might be partly funded by loans from JBIC.

There are four packages for the entire project, he said, where the pre-qualification was only for the first package, the tunnel. The others include the dam, the pump station and piping, where local companies stood a chance, Lim added.

Title Pahang-Selangor water transfer project, involves the transfer of water from Pahang to the Langat 2 plant in Hulu Langat, Selangor, and is expected to cost RM10 billion.

A chunk of the cost will be for the setting up of two water treatment plants of 2,000 MLD (million litres a day), valued at about RM5 billion.

One is expected to be set up to coincide with the completion of the tunnel and another some six years later.

In mid- November, news reports cited Deputy Energy, Water and Communications Minister Datuk Shaziman Abu Mansor saying that the construction of the raw water project would begin early next year and complete in 2013.