Construction - PAAB issues tenders for Langat 2

kiasutrader

Publish date: Tue, 11 Sep 2012, 10:47 AM

- The Star reports that Pengurusan Aset Air Bhd (PAAB) will issue the tender documents tomorrow to kick-start the development of the Langat 2 water treatment plant project.

- The move by PAAB follows a decision by the Special Cabinet Committee on the Selangor Water Issue, which is chaired by Deputy Prime Minister Tan Sri Muhyiddin Yassin. This was despite the protracted negotiations between both the Federal and state governments on the project.

- The tender documents are said to be available from tomorrow and PAAB is due to organise a tender briefing at its office in Kuala Lumpur. The closing date for the tenders has been set for November 20.

- The Langat 2 project is designed to alleviate any potential shortfall in water supply in Selangor, which experts say could happen by 2016. Raw water that is transported via a tunnel from Pahang that is still being constructed would be treated at Langat 2.

- The estimated cost of Langat 2 has been bandied about at RM3bil, lower than the RM5bil when it was mooted a couple of years ago. However, we believe this could be because only 1,130 million litres/day (mld) would be put out, instead of 2,260 mld as originally planned.

- Together with Langat 2, the estimated cost of the entire Pahang-Selangor raw transfer scheme is around RM6bil.

- According to PAAB's website on September 4, tenders for Package 2A could be dished out soon. This forms the largest of over 20 packages under Langat 2. The other jobs that are up for grabs include pipeline, reservoir, pump house and water tanks.

- We gather that the most critical package is the construction of the water treatment plant (WTP), as it would require 2 years to build.

- We expect the Langat 2 project to generate a lot of interest, since it is one of the more sizeable infrastructure projects in Malaysia. While the list could be extensive, we expect several contractors with water-related experience to be in the reckoning.

- These would include the likes of Gamuda, IJM, WCT, JAKS Resources, Loh & Loh as well as Puncak Niaga Holdings.

- That said, we are unsure if the Langat 2 can really take off before the general election. From our channel checks, the Selangor government has yet to issue the development order for the project. Furthermore, the state government had previously indicated that Langat 2 is to be part of the negotiation process on the consolidation of water assets in Selangor, where talks remain protracted.

Source: AmeSecurities

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