SUBANG JAYA, JAN 27: Kumpulan Europlus Bhd (KEB) will be calling for tenders for the remaining six packages for its RM6 billion West Coast Expressway (WCE) in the next few months.
The six packages, of the total 11 packages under the WCE project, to be dished out this year is worth RM2.2 billion.
Speaking to reporters after KEB’s EGM yesterday, CEO Datuk Neoh Soon Hiong said the company will call for tenders for two packages next month, followed by the remaining four packages within three months.
Earlier, KEB awarded five packages worth of RM2.8 billion to IJM Construction via a direct award as per the terms of the concession agreement.
“The progress of these packages comes to 20%,” he said, noting that as a whole, WCE is now 5% complete.
Neoh does not foresee an increase in the construction costs for WCE amid the weakening ringgit which has made imported building materials more expensive.
“So far until today, it is still within the budget (of RM5 billion purely for construction costs),” he stressed.
The 232-km WCE will link Banting to Taiping and is expected to be completed in the fourth quarter of 2019. The concession period for WCE is 50 years.
The funding for the project includes RM2.5 billion in debt financing, RM2.24 billion in government support loan and RM1.2 billion in equity/cash call.
Neoh said the company is not interested in bidding for the upcoming highway projects such as the Damansara-Shah Alam Elevated Expressway (DASH) and Sungai Besi-Ulu Kelang Elevated Expressway (SUKE), as WCE will keep it busy for the next few years.
Following KEB shareholders’ approval for the disposal of a substantial stake in Talam Transform Bhd at yesterday’s EGM, the company is now left with only two main assets, namely WCE and the Bandar Rimbayu property project in Kota Kemuning.
Neoh said the company has no plans to diversify into other businesses for the time being.
“I think the main core is to complete the WCE as per schedule. In the meantime, we’re also looking for other opportunities like acquiring land bank along the WCE corridor.
“Even if we were to diversify, it will also be related to infrastructure, property and construction businesses. There is no intention to diversify out of that,” he reiterated.
The RM80.5 million disposal of a 21.34% stake in Talam to Tan Sri Chan Ah [email protected] Chong Yoon, will result in KEB registering a net gain on disposal of RM6.56 million. Proceeds from the disposal will be used, among others, to partially finance the WCE project.
Chan, who is the founder of Talam, is also the former president and CEO of KEB. Latest filings with the stock exchange show that Tan currently holds a 2.55% direct and 27.47% stake in Talam, respectively.
Commenting on the Bandar Rimbayu project, Neoh said on average it contributes an annual earnings of RM20 million to RM50 million to the company.
KEB holds a 40% stake in the Bandar Rimbayu project, while the remaining 60% is owned by IJM Land Bhd.
Spanning 1900 acres of land, it will be developed over the next 10 to 15 years with a gross development value of over RM10 billion.
KEB reported an 82.09% surge in net profit to RM15.19 million for the second quarter ended Sept 30, 2015 compared with RM8.34 million in the previous corresponding period, thanks to higher construction revenue.
Six-month net profit, however, dropped 45.66% from RM47.68 million to RM25.91 million.