The controversial Penang South Island (PSI) reclamation project is gaining momentum as Gamuda Bhd has been awarded the contract for the reclamation works of Island A.
Valued at RM3.7 billion, this contract is a significant milestone in the progress of the PSI development.
In an announcement to the bourse, Gamuda confirmed that it had today been awarded the contract for the design, management, construction, and completion of the Phase 1 Reclamation Works of Island A to the turnkey contractor, SRS TC Sdn Bhd – a wholly owned subsidiary of Gamuda.
Consequently, SRS TC has further subcontracted the Phase 1 reclamation works to another Gamuda subsidiary, Gamuda Engineering Sdn Bhd.
The contract was awarded by the project developer, Silicon Island Development Sdn Bhd – a 70%-owned subsidiary of Gamuda via SRS PD Sdn Bhd, while PIC PD Sdn Bhd, a Penang state government-owned entity, owns the remaining shares.
The Phase 1 reclamation works encompass approximately 1,260 acres of Island A and will adhere to all necessary regulatory approvals and compliance requirements.
The contract sum for this phase is RM3.7 billion, with a significant portion awarded to Gamuda Engineering.
The works are scheduled to commence on July 1, 2023, and complete by June 30, 2030.
A performance bond of 5% of the contract sum ensures financial security for the project.
The Phase 1 reclamation works are expected to contribute significantly to Gamuda’s revenue and earnings for the financial year ending on July 31, 2024.
To recap, the project development agreement signed on March 6, 2023, between the Penang state government and Silicon Island Development established that private sector capital, rather than PSG/PIC PD funding, would be used for the development of Island A.
As per the agreement, the project developer is obligated to award the entire scope of works for Island A, including reclamation, infrastructure, and Highway PIL2A, to SRS TC.
The PSI reclamation project was scaled down from three islands to one island following a request by Prime Minister Anwar Ibrahim to reduce the scope of the project.
The size of the project was reduced from 4,500 acres to 2,300 acres, representing a 49% reduction from the approved plan.
Gamuda’s share price closed at RM4.25 today, reflecting a 0.71% increase. Its market capitalisation stands at RM11.31 billion.
