By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 8, 2013
IJM Corp Bhd, Malaysia's second biggest expressway operator, is eyeing key packages of the RM5.6 billion West Coast Expressway (WCE) project to boost its current order book of over RM3 billion.
"We are pleased to note that the WCE has been signed by the concessionaire and the government. Going forward, there is possibility that IJM will enhance its order book by participating in key packages of the WCE.
"We think tenders for the project will likely be called in the fourth quarter of this year after the financial closure. Construction may commence by year-end," IJM chief executive officer and managing director, Datuk Teh Kean Ming told Business Times.
Analysts said the construction of the WCE will boost IJM's order book to over RM6 billion if it is able to secure the key packages for the project.
West Coast Expressway Sdn Bhd (WCESB) last week sealed the concession agreement (CA) for the WCE project between Banting in Selangor to Taiping in Perak with the federal government after agreeing to certain terms and conditions. The deal was inked after several years of negotiation.
The biggest winner from this development is IJM as it owns 20 per cent of WCESB, and also a 25 per cent stake in Kumpulan Europlus Bhd (KEuro). This results in IJM having an effective stake of 38.2 per cent in WCESB.
The inclusion of WCE has further solidified IJM's position as the country's second largest expressway operator after PLUS Expressways Bhd.
IJM owns five highway concessions in India and now four in Malaysia, and it would likely add to its portfolio.
Despite the stake in WCESB, IJM, just like other construction companies, will have to bid for packages for the WCE project on an open tender basis.
IJM closed eight sen higher yesterday at RM5.20 while KEuro was down two sen to RM1.06.
The WCE will take five years to construct after which, WCESB will collect toll for 60 years as it is undertaken on build-operate-transfer terms.
The deal entails WCESB developing a 233km tolled highway from Banting to Taiping instead of the original 316km, cutting cost from RM7.07 billion to around RM5.6 billion.
It is understood that there is a 93km stretch between Banting and Taiping which is still in good condition, and a new road is not required.
"If WCESB were to build that stretch, it would eat into its profit margins as it is a non-toll road. The inking of the CA is a win-win situation for both the government and the concessionaire," a source said.
Last week, an English weekly reported that the privatisation deal for the Taiping-Banting highway had revised terms that were more favourable to the government.
The source said there is a new sharing mechanism, which is beneficial to the government.
"The government will also be reducing its subsidies for the project. Furthermore, if traffic volume on the WCE hits a certain target, there is a provision to shorten the concession to below 50 years," the source said.
sharen@nstp.com.my
Published in NST on January 8, 2013
KEY PACKAGES: Company's order book will thicken to over RM6b if it clinches deals, say analysts
"We are pleased to note that the WCE has been signed by the concessionaire and the government. Going forward, there is possibility that IJM will enhance its order book by participating in key packages of the WCE.
"We think tenders for the project will likely be called in the fourth quarter of this year after the financial closure. Construction may commence by year-end," IJM chief executive officer and managing director, Datuk Teh Kean Ming told Business Times.
Analysts said the construction of the WCE will boost IJM's order book to over RM6 billion if it is able to secure the key packages for the project.
The biggest winner from this development is IJM as it owns 20 per cent of WCESB, and also a 25 per cent stake in Kumpulan Europlus Bhd (KEuro). This results in IJM having an effective stake of 38.2 per cent in WCESB.
The inclusion of WCE has further solidified IJM's position as the country's second largest expressway operator after PLUS Expressways Bhd.
IJM owns five highway concessions in India and now four in Malaysia, and it would likely add to its portfolio.
Despite the stake in WCESB, IJM, just like other construction companies, will have to bid for packages for the WCE project on an open tender basis.
IJM closed eight sen higher yesterday at RM5.20 while KEuro was down two sen to RM1.06.
The WCE will take five years to construct after which, WCESB will collect toll for 60 years as it is undertaken on build-operate-transfer terms.
The deal entails WCESB developing a 233km tolled highway from Banting to Taiping instead of the original 316km, cutting cost from RM7.07 billion to around RM5.6 billion.
It is understood that there is a 93km stretch between Banting and Taiping which is still in good condition, and a new road is not required.
"If WCESB were to build that stretch, it would eat into its profit margins as it is a non-toll road. The inking of the CA is a win-win situation for both the government and the concessionaire," a source said.
Last week, an English weekly reported that the privatisation deal for the Taiping-Banting highway had revised terms that were more favourable to the government.
The source said there is a new sharing mechanism, which is beneficial to the government.
"The government will also be reducing its subsidies for the project. Furthermore, if traffic volume on the WCE hits a certain target, there is a provision to shorten the concession to below 50 years," the source said.
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