Six toll roads costing RM20bil on the cards

At least six toll roads offering construction jobs worth RM20bil are coming on stream in the next 18 months.

Two of them, the RM5.04bil West Coast Expressway (WCE) and the RM1.18bil extension of the Duta-Ulu Kelang Expressway or Duke (pic), have achieved financial close, indicating that work on the project is to start within months.

The other highways being firmed up are the RM2.5bil Kinrara-Damansara Expressway (Kidek), the RM4.18bil Sungai Besi-Ulu Kelang elevated expressway (Suke), the RM4.3bil Damansara-Shah Alam Expressway (Dash) and Ahmad Zaki Resources Bhd’s East Klang Valley Expressway.

“The construction works for all the highways should be up and running by next year,” said a construction industry official.

However, it isn’t party time for every construction company as the lack of resources and lower margins may render some of these jobs less profitable.

While on the surface, construction players may cheer at the huge amount of work that await them, the scale of these projects may be too much for them to handle.

Only big players like Gamuda Bhd and IJM Corp Bhd, who are frontrunners for jobs like the Mass Rapid Transit (MRT) Line 2 and the West Coast Expressway (WCE) jobs will be obvious beneficiaries, said the construction industry official.

For mid-tier players such as WCT Holdings Bhd, Gadang Holdings Bhd, Bina Puri Holding Bhd, TRC Synergy Bhd, Mitrajaya Holdings Bhd, Kimlun Corp Bhd and many others, it will be no walk in the park.

Competition among mid-tier players is intense, and only those who are able to efficiently manage their cost will reap the benefits from the massive artery of highways.

“Margins for civil works are at the 5%-7% level for government jobs, which nowadays is more of a norm than an anomaly,” said one construction player who is looking to bid for a few jobs in the second half of the year.

“Within the sector, we are all aware of many jobs that will be open for tender soon. It is not just the highways. We are busy now preparing our documentation and tenders,” he said.

“The Klang Valley aside, immense construction works in the Iskandar Development Region is taking place at full steam. Demand from both these regions have started to incur huge cost pressures to the sector as a whole,” he lamented.

Under these circumstances, the mid-tier players in particular, will need to be extra careful in costing their projects.

“Yes it is a given that margins moving forward will be thinner. The less efficient players will suffer,” said another contractor from a mid-sized construction player.

“It is competitive, but we rather have this situation, than no work at all. I believe there will be enough work to go round for all,” he said.

He added that thanks to the construction of the RM20bil MRT and the ongoing RM7bil Kelana Jaya and Ampang Lines LRT extension projects. many construction players were already sitting on plump order books.

Thus, if an upcoming contract offered margins that were too thin, he doesn’t foresee many takers.

Construction insiders said that the level of interest for Duke and WCE has been varied.

The expansion of the Duke is expected to add two more links to Sri Damansara and Jalan Tun Razak by 2016.

As for IJM Corp Bhd’s 38%-owned RM5.04bil WCE, it has supposedly generated strong interest within the sector.

The WCE is to be constructed by a consortium comprising Kumpulan Europlus Bhd and IJM Construction Sdn Bhd.

Sources said that subcontractors were lining up in the IJM office looking to submit their tenders for the WCE.

“With IJM being a Grade A contractor and having a strong balance sheet, its ability to make payments will be a whole lot more secure. That’s one reason for the buzz,” said one construction analyst.

The guidance for contractors is that they can enjoy margins between 6% to 8% for the WCE.

On that note, the analyst expects the awarding of tenders to be disclosed next month onwards as IJM has guided for construction works to begin in the third quarter.

Sources said that Permodalan Nasional Bhd, which is constructing Suke and the Dash has been knocking at the doors of some of the bigger construction players, checking for their availability and keenness in taking up these jobs.

The Dash is estimated to cost RM4.18bil. The planned highway begins from Puncak Perdana U10 off Jalan Batu Arang and terminates at the Penchala Link with access to both the Sprint Highway and the Damansara-Puchong Expressway (LDP).

The RM4.3bil Suke is a proposed 31.8km, elevated three-lane carriageway that will begin from the Sri Petaling Interchange (near the Bukit Jalil Stadium) and will run through Sungai Besi and Alam Damai.

“Construction players aren’t exactly lining up to accept government jobs. The cost of construction is getting higher and margins are increasingly becoming squeezed. Should there be delays or cost overruns, there will be no compensation from the government,” said one observer.

Another highway which has many of the players excited is the RM2.5bil Kidex which sources say should be achieving financial close very soon.

A construction analyst said that it would be the timing of these tenders that would determine whether players were able to bid for them.

Kinrara-Damansara Skyway (Kidex)

Malaysia needs more highways as the number of cars on the roads is set to increase even further.

A study done in 2008 estimated that by 2025, there would be some 3.9 million cars on the road.

Kidex Sdn Bhd CEO Datuk Mohd Nor Idrus cited this as one of the reasons why the Kinrara-Damansara Skyway (Kidex) was needed.

A total of 90% of the highway will be elevated and it will be constructed over existing roads in Petaling Jaya.

Mohd Nor said experts in transport planning were roped in to conduct a study in 2011 on how a new highway could help improve traffic dispersal between the north and south Klang Valley links.

New highway needed

A forecast done by SKM-CB Colin Buchanan-Sinclair Knight Merz from Britain showed that Kidex should be able to reduce travelling time between Damansara and Kinrara by about 25%.

The traffic volume would also be reduced by 50% in both directions from Puchong to Petaling Jaya.

It is estimated that traffic volume will reduce by about 30% from Taman Tun Dr Ismail, the New Klang Valley Expressway (NKVE) and Bandar Utama to Petaling Jaya.

The study is currently being updated to take into account the latest traffic conditions.

Mohd Nor said Petaling Jaya residents and business owners would benefit through a reduction in the number of cars in neighbourhood roads.

“Those heading from Damansara towards Puchong and vice versa can use Kidex for a faster journey.

“This will help free the existing roads for those who only want to head to parts of PJ,” he said.

Mohd Nor said several new business developments in areas such as Section 14, Petaling Jaya would benefit from Kidex, adding that current access and exit points would remain.

Kidex will be 14.9km in length and will start at the NKVE Damansara Toll Plaza.

There will be seven interchanges – NKVE, Bandar Utama, Sprint, Federal Highway, NPE, Kesas and Bukit Jalil.

There will be two tolls for Kidex — one to be located in SS2 and another in Taman Dato’ Harun.

Those opposed to the project have raised concerns including the “psychological discomfort” of opening their windows to an elevated highway like Kidex.

However, Mohd Nor said there would be strict guidelines as stipulated by the authorities.

He added that 40% of the elevated highway will be 24m high (equivalent to an eight-storey building) another 40% would be 16m high and the remaining 20% would be 8m above ground.

The distance from the edge of the highway carriage and any of the apartment and houses should be at least 13m.

Any lots (houses and business premises) in between the distance must be acquired.

“The highway will be very high and far away from their houses especially those living in landed properties,” he said.

Mohd Nor added Kidex should be welcomed for the benefits it would bring to the larger community and future generations.

“We should also consider the psychological discomfort of those who are currently suffering from the daily traffic jams,

“The morning bumper-to-bumper traffic jams at parts of Damansara and TTDI during rush hour is bad and this highway will be able to help disperse the traffic,” he said.

Mohd Nor added it was not economically viable to double-deck the LDP as suggested by some residents and it would also cause a bottleneck at the exits.

“To build Kidex we may need to acquire some 100 lots of residential and industrial areas.

“However if we were to double-deck LDP, we would have to acquire some 1,000 lots of mostly residential properties.

“The government would need to spend more on compensation and it would not be economical,

“If we double-deck LDP, there would still be the same exits,” he said, adding the traffic situation would in fact worsen.

Currently LDP has traffic volume classified as Class F, the worst, during peak periods.

Mohd Nor said there is an urgent need for an alternative traffic dispersal system which bypasses Petaling Jaya.

He also highlighted that since the LDP was built, business has boomed in Puchong.

Besides cutting travelling time, Kidex will help develop the economy and increase the property value in areas such as Bandar Kinrara, Serdang and Seri Kembangan.

“From past experience, property value will always go up in an area where the highway cuts through.

“Look at Puchong today, it has undergone tremendous growth because of the highways,” he said.

Public transport not an option

To build a mass public transportation system like the MRT or LRT, more train stations are needed and they can only be constructed if there is a high volume of passengers in every station.

“Kidex is 14km long with only two toll plazas.

“However if we were to build something similar to the LRT, we would need to acquire more land to build close to seven stations within the same distance,” said Mohd Nor.

Mohd Nor clarified that there was a bidding process for the construction of Kidex.

“I know there were other bidders and the process took some six months.

“We were then told to proceed with our studies.

“It took three years to ink the agreement with approval obtained from the state and Federal governments in principal,” said Mohd Nor.

The project was awarded to the company owned by Zabima Engineering and Construction Sdn Bhd and Emrail Sdn Bhd.

Both are PKK Class A and CIDB G7 certified contractors.

Mohd Nor explained that approval in principal meant conditional approval.

“To undertake detailed studies would cost millions of ringgit.

“Hence, we were given conditional approval to kick-start the research process.

“We also had to submit studies to the Department of Environment as well as the latest traffic impact assessment to the relevant authorities,” he said.

The concessionaire also needed to obtain public feedback and conduct surveys.

“We are abiding with the law and going through all the processes required.

“We have already started to engage with residents’ groups and provide them as much information as we can,” he said.

Townhall sessions are ongoing and all the information gathered will be used to improve the plan further, he said.

“Even feng shui proposals would be taken into consideration,” said Mohd Nor.

The project must comply with the Town and Country Planning Act 1976.

Final approval will rest with the state government.

Land compensation will be done based on market rates by the government and not the concessionaire and the Valuation and Property Services Department would be involved. However, landowners can also engage their own evaluators.

“I am sure the process will be fair.

“Landowners who are not satisfied with the rate can always bring the matter to court,” he said.

Mohd Nor assured residents that no local roads would be closed once Kidex was completed, giving people a toll-free option.

The toll rate will be decided by the Federal Government.

Mohd Nor said the Malaysian Highway Authority has also been in discussion with the Selangor government over the need for a new highway.

Mohd Nor added they were doing their best to keep the public informed at every stage. “There will be more townhall sessions so we can engage with stakeholders more,” he said.