Tanco consortium secures RM700m warehouse complex job in Pulau Indah

Tanco Holdings Bhd and a unit of China Nuclear Industry Huaxing Construction Co Ltd have accepted a RM700 million letter of award to build an industrial warehouse complex in Pulau Indah, Selangor. The project includes two ambient warehouses, a cold storage warehouse, office and supporting facilities

PETALING JAYA (Nov 6): Tanco Holdings Bhd’s indirect wholly-owned subsidiary Tanco Builders Sdn Bhd and CNECC Engineering (Malaysia) Sdn Bhd, a unit of China Nuclear Industry Huaxing Construction Co Ltd, have accepted a RM700 million letter of award to build an industrial warehouse complex in Pulau Indah, Selangor.

In a Bursa Malaysia filing on Thursday (Nov 5), Tanco said the contractors had accepted the letter of award from Jaroses Partners Sdn Bhd that day and entered into a consortium agreement to undertake the project. The complex will be built on land held under PT 154764 along Lebuh Raya Pulau Indah, Pulau Indah (KS 13), Mukim Klang.

The complex will comprise two single-storey ambient warehouses, a single-storey cold storage warehouse and compressor room, an office building, a canteen and surau, and supporting facilities including a Tenaga Nasional Bhd (TNB) substation and sewerage treatment plant. The contract sum includes applicable taxes, duties, levies and fees, but excludes service tax on construction work services.

Commencement of earthworks is subject to Jaroses Partners obtaining planning permission and early earthworks approval. The earthworks must be completed within six months of commencement, excluding subsequent periods required for ground settlement, soil consolidation, monitoring, testing, approval or certification. Building and remaining works must be completed within 18 months of their commencement, which is subject to building plan approval and the required commencement documentation. The 33kV TNB substation must be completed within 12 months after completion of the earthworks.

Under the consortium agreement, Tanco Builders will coordinate with the employer, CNECC Malaysia, local authorities and other stakeholders, and obtain and maintain the necessary general contracting rights, approvals and arrangements. CNECC Malaysia will undertake and manage the technical and construction works, including procurement, installation, testing, commissioning and rectification.

Tanco said the group’s revenue recognition and financial exposure from the project would be limited to Tanco Builders’ pre-agreed fixed entitlement for its coordination and management scope, rather than the full RM700 million contract value. The entitlement amount was not disclosed. Unless otherwise agreed or Tanco Builders accepts additional work, its fixed entitlement will not be subject to deductions for project costs, expenses or liabilities and will apply irrespective of the project’s revenue or profit.

The letter of award also requires corporate guarantees from Tanco and CNECC Malaysia’s ultimate holding company, China Nuclear Industry Huaxing Construction Company Ltd, to guarantee the contractors’ performance. Tanco Builders must provide CNECC Malaysia with a back-to-back bank guarantee proportionate to its entitlement. CNECC Malaysia will bear the costs and funding requirements of the performance bond required under the award, equivalent to 10 per cent of the contract sum.

The contractors must use their best efforts to achieve at least LEED Gold certification. Under the consortium agreement, CNECC Malaysia is responsible for compliance with the specified LEED requirements and associated costs and penalties. Tanco said the award supports its strategy to expand and diversify its construction business and, barring unforeseen circumstances, expects the arrangements to contribute positively to group earnings over their duration.