A-G’s report lists faults and cost overruns for Senai-Desaru Expressway

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PETALING JAYA: Despite the land acquisition costs for the Senai-Desaru Expressway project in Johor ballooning from RM365mil to RM740.6mil, the highway has been found to be unsatisfactory and a danger to road users.

According to the Auditor-General’s Report, among the reasons for the doubling of land acquisition costs were the compensation payment which exceeded market prices, high injurious affection and severance payments, and interest of 8% due to late repayments.

The completed 77km-Senai Desaru Highway, worth RM1.37bil, was also found not to be in accordance with specifications, resulting in damage to the road surface and endangering road users.

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

Bad job: Despite its high cost, the Senai-Desaru Expressway was found it to be a danger to road users.

“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 construction agreement for the project was signed between the Federal Government and the concession company on July 31, 2004, with the intention of linking Johor Baru to the Desaru tourist area, and to reduce the congestion on the Pasir Gudang Highway.

The report also 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 forecast by the concession company (which was approved by the Road Planning Division of the Public Works Ministry in December 2001).

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

The report also found that the concession company had failed to complete the construction work in the stipulated period and did not maintain the highway satisfactorily.

“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.

The report then recommended for MHA to review the feasibility studies done by the concession company to ensure that the facts presented were 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.

The Treasury Department 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 land acquisition costs.

“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 had valued the land based on rates as at November 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,” the report stated.

On the issue of the undulating road surface, the Treasury said all 15 problematic locations had been identified and the report for the repair work had also been submitted to MHA on April 29.