Contract, governance weaknesses flagged in Sarawak Pan Borneo project — Auditor-General

Heavy construction work at one of the stretches along the Pan Borneo Sarawak Highway. File Photo

By DayakDaily Team

KUALA LUMPUR, Oct 5: A total of 10 work packages for the Sarawak Pan Borneo Highway (LPB) project have been fully completed, while another package, WP11, had reached 99.9 per cent completion as of March 31, 2026.

In a statement on the Auditor-General’s Report (LKAN) 2/2026 today, the National Audit Department (JAN) said the achievement of the Sarawak LPB project’s objectives could not yet be assessed as the project had not been fully completed.

“The audit revealed weaknesses in contract management and governance. Specifically, claims amounting to RM1.780 billion for utility relocation and reinstatement works had not been executed, while payments totalling RM32.07 million were made for a Project Information System that became inaccessible after the agreement period ended,” the statement said.

LKAN 2/2026, which covers the Federal Government’s Financial Statements for 2025, the activities of Federal Government ministries and departments, as well as the financial statements and activities of state governments, agencies, ministries and departments, and the management of state-owned companies, was tabled in the Dewan Rakyat today.

Meanwhile, Phase 1 of the Sabah LPB project, planned since 2015 and comprising 35 work packages spanning 706 kilometres, remains unfinished after more than a decade.

JAN reported that as of March 31, 2026, only four work packages, or 11.4 per cent, with a total original cost of RM567 million, had been completed, while the remaining 31 work packages, or 88.6 per cent, valued at RM16.319 billion, were still under implementation.

“Of the 31 projects currently under implementation, nine work packages are classified as ‘sick’ projects, 13 are behind schedule, and nine are ahead of schedule.

“Project management issues identified as serious irregularities include the approval of Variation Orders (VO) exceeding authorised limits, amounting to RM513.99 million, and delays in utility cost claims for completed projects totalling RM41.37 million,” the statement said.

LKAN 2/2026 also focuses on several key national infrastructure projects, namely Phase 1 of the Sabah LPB project and the Sarawak LPB project, as well as the Sungai Golok Integrated River Basin Development Project (PLSB) in Kelantan and the Coastal Conservation Programme.

Regarding the PLSB, JAN reported that the project had not been completed in accordance with the stipulated scope, timeline, cost and quality standards.

Phase 1 had experienced delays, with an Extension of Time (EOT) approved until July 21, 2027, superseding the completion date of Aug 13, 2024, stipulated in the supplementary agreement.

Implementation of Phase 2 has also been stalled due to delays in the procurement process.

“The audit identified weaknesses in project planning, inter-agency coordination, scope change management, contract administration, design control, construction execution and the management of consultant appointments.

“These weaknesses resulted in design changes, increased project costs, implementation delays, structural damage to the pump house, the construction of temporary structures and non-compliance with contract requirements,” the statement said.

JAN said if the weaknesses were not comprehensively addressed, the project’s objectives, namely providing flood protection for the Golok River Basin, safeguarding residential and agricultural areas, and strengthening security in high-risk border areas, would continue to be delayed while increasing the government’s financial implications.

Meanwhile, JAN reported that based on 10 completed projects, the nationwide Coastal Conservation Programme had achieved its objectives of protecting vulnerable coastal areas from erosion, reducing coastal flood risks and providing navigational channels.

However, the audit also identified weaknesses in the implementation of the Kuala Nerus Coastal Erosion Control Project in Terengganu, which experienced a 15.7 per cent, or 144-day, delay.

The delay was attributed to a shortage of machinery, a lack of construction activity at Breakwaters No. 1, 2, 3 and 9, as well as delays by the contractor in obtaining Environmental Impact Assessment (EIA) approval for the beach nourishment component.

“To address this issue, coordination between the Public Works Department (JKR) and the Department of Irrigation and Drainage (JPS) must be strengthened so that Breakwaters No. 7 and 8 can be completed immediately, before the Northeast Monsoon season, to prevent the collapse of roads that have already been repaired,” the statement said. — BERNAMA