KUALA LUMPUR: The Penang South Islands (PSI) reclamation project, which is a new urban development off the coast of Penang Island that includes homes, leisure, and work sites, will finally begin reclamation work next month.

PSI is intended to be an Internet of Things (IOT)-enabled smart city to complement Georgetown. It will be based on sustainable and green living and environmental, social, and governance principles, with the goal of being a top investment destination in the area.

On July 1, Gamuda Bhd will begin the RM3.72 billion reclamation work for Phase 1 of Island A of the PSI project, which is situated close to the Penang International Airport at Bayan Lepas.

SRS TC Sdn Bhd, the turnkey contractor, has been given the design, management, construction, and completion of the Phase 1 reclamation works by Silicon Island Development Sdn Bhd, a 30:70 project developer company between PIC PD Sdn Bhd and SRS PD Sdn Bhd.

SRS PD and SRS TC are both wholly-owned subsidiaries of Gamuda Bhd. The Phase 1 reclamation works have been given to Gamuda Engineering Sdn Bhd, another fully owned subsidiary of Gamuda, by the turnkey contractor.

PIC PD is a fully owned subsidiary of Penang Infrastructure Corporation Sdn Bhd, a special purpose company established by the state government to lead the implementation of the Penang Transport Master Plan.

Gamuda told the stock exchange yesterday that the contract's scope covers the design, management, construction, and completion of Island A's Phase 1 reclamation works, which total roughly 655.59 hectares and are all in accordance with the approvals of the relevant authorities.

According to Gamuda, construction would start on July 1, 2023, and last until June 30, 2030.

"The Phase 1 reclamation works are expected to contribute positively to the revenue and earnings of Gamuda Group for the financial year ending July 31, 2024," it said.

The PSI project's downsizing from the three islands that were initially planned to be included, Island A (2,300 acres), Island B (1,400 acres), and Island C (800 acres), to just one island (2,300 acres), won't have an effect on Gamuda's profitability, according to analysts.

The Penang government decided to scale down the PSI project following Prime Minister Datuk Seri Anwar Ibrahim's announcement on May 6 that the Federal Government will provide additional funds to assist the state in expediting the construction of the George Town-Bayan Lepas light rail transit (LRT) project.

The downsize was a 49 per cent reduction from the original approved plan, and only development works for Island A (Silicon Island) would proceed, while the second and third islands, B and C, would be discontinued.

The development work would only be carried out on Island A (Silicon Island), a reduction of 49 per cent from the first approved plan, and the construction of Islands B and C would be abandoned.

Gamuda participates on two levels in the Island A reclamation project through its ownership of SRS TC, acting as both a project developer (PD) and a turnkey contractor (TC) under a 70:30 joint venture between SRS and the state nominee.

Gamuda's engagement on the Island A reclamation project is on two levels, firstly, through its ownership in SRS TC, and secondly, as a project developer and a turnkey contractor through the 70:30 joint venture between SRS and the state nominee.