The federal government unexpectedly announced today that Global Upline Sdn Bhd, a company controlled by Sarawak businessman Ting Pek Khiing, has begun upgrading and expanding the Kuching International Airport.

Ting, a close friend of former premier Dr Mahathir Mohamad, was awarded the RM620 million negotiated contract.

The company, which also built the Miri and Bintulu airports, is chaired Dr Sulaiman Daud,a former federal agriculture minister, while the managing director is Dr Yusuf Hanifah, a former mayor of Kuching City North.

The project was among several mega projects approved under the Mahathir administration but which had been shelved or put on hold after Abdullah Ahmad Badawi took over as prime minister last year.

Deputy Transport Minister Douglas Uggah told a press conference in Kuching this morning that the project is of "urgent necessity" to support development of Sarawak's commercial, industrial and tourism sectors.

The ministry had issued the letter of intent during the final days of the Mahathir administration but the preliminary work stopped soon after, although much of the equipment remained at the site.

'Reduced price'

Under the project, the runway will be extended to 3,780m, allowing it to handle larger aircraft such as B747 and A380. The terminal building will be expanded to twice its size, in anticipation of passenger traffic growing to five million by 2012.

The work will take up 42 months and is scheduled to be completed in mid-2007.

Site clearing and construction of the project office started two weeks ago, creating speculation that the company had finally been awarded the contract.

Said a local banker: "Global Upline and Ting have a good record as an airport builder."'

Another asked: "It is probably logical to ask where is the money for the Kuching airport upgrading coming from. Could it be via other big projects earmarked for Sarawak or other parts of the country?"

Observers were surprised by the cost of the project although it represents a reduction of about RM200 million from the original bid submitted by Ting, according to reliable sources.

Project consultants told malaysiakini that payment would be based on progress of completed work, instead of the 'build first, pay later' scheme proposed by the contractor.

"Pak Lah can justify agreeing to the contract at this price since the government has negotiated a significant reduction," said a source.

The Far Eastern Economic Review reported on July 1 that the federal government had issued 310 non-binding contracts valued at several billion ringgit before Mahathir stepped down.

Because so much money had been committed to infrastructure projects under the Mahathir administration, "the government is now struggling to settle its bills", the report claimed.