Senai-Desaru Expressway

Active

The government of Malaysia awarded a 33-year contract to Senai-Desaru Expressway Bhd (SDEB) for the construction and operation of a 77 kilometer expressway connecting Senai with Pasir Guadang and Desaru in the state of Johor in July 2004. The project developed on Build-Operate-Transfer (BOT) basis and was designed to have a dual carriageway, 18 land bridges, 19 river bridges, four toll plazas and two rest areas. It was to feature a 1.9 kilometer bridge over Sg Johor. SDEB was 70% owned by Rancak Bistari Sdn Bhd, which was majority owned by Ranhill Berhad. The remaining 30% was owned by Yayasan Pelajaran Johor, and agency of Johor’s state government. The project cost was estimated at USD 368 million (RM 1.05 billion). The project reached financial closure in December 2005 when SDEB issued a US$255 million (RM 965 billion) of irredeemable convertible unsecured loan stocks (ICULS) in the Malaysian bond market. The debt tenor was for up to 33 years. SDEB also secured US$50 million financial support of Islamic development Bank (IDB) through its infrastructure fund (IDBIF) in June 2005 which helped it to issue the ICULS. To mitigate risks of cost overruns and construction delays, SDEB entered into a fixed-price construction contract with Ranhill Engineers and constructors Sdn Bhd (RESCB) in June 2005. RESCB was wholly owned by Ranhill Bhd. The expressway had projected earning of US$ 39.47 million (RM 150 million) by 2009 and a peak of US$263.16 (RM 1 billion) by 2038. After construction, the expressway would become the third longest toll road in Malaysia after the North-South expressway and the East Coast Highway. The expressway commenced from just east of the crossover between Federal Route 1 and the Malaysia-Singapore Second Crossing in the eastern corridor of Johor, and ended at Penawar in the eastern corridor (the crossing at Sungai Johor was via a cable-stay bridge). Meanwhile, the highway branched out at Cahaya Baru through a corridor leading south to Pasir Gudang (via a link referred to as the “Pasir Gudang Connector”). The expressway would link seven main industrial areas in Johor such as Senai, Ulu Toram, Pasir Gudang, and Penawar. Pasir Gudang was expected to provide 50% of the traffic flow on the expressway. The construction period was divided in two phases. Phase one consisted on connecting Senai Airport to Ulu tiram to Cahaya Baharu and Pasir Gudang, and was planned to be ready in 2007. Phase two consisted on connecting Cahaya Baharu to Desaru and Bandar Penawar, and included a 1.1 km bridge across Sungai Johor. This phase was planned to be completed in 2008. In August 2009, the phase one part of the project became open to traffic. The expressway was designed to alleviate traffic congestion along the Pasir gudang Highway, and to provide a quicker and more direct route to connect the eastern and western corridors of Johor. The expressway was to shorten the traveling time between those corridors by more than an hour. In December 2014, the Malaysian government granted an extension of the concession from July 2038 until July 2053. And in May 2014, the Senai-Desaru Expressway (SDEB) issued RM1.89 billion ($586 million) in sukuk bonds to refinance its existing senior and junior debt. Bank Muamalat led the issue and CIMB was facility agent. The tenor of the sukuk was at least 24 years and up to 39 with a final maturity date of July 17 2053. The issuance refinanced SDEB’s existing sukuk programme, which comprised RM1.89 billion in senior notes and RM3.69 billion in junior notes.