RM5.22b MRT2 SAVINGS
THE government and the MRT2 project delivery partner have shaved billions off the original cost of the above-ground portion of the rail initiative. The finance minister expects more savings to be realised as the underground package will be retendered.
THE second Mass Rapid Transit project (MRT2) is expected to save RM5.22 billion, or 23 per cent of the original cost, for the above-ground portion of the project with the open tender exercise, said Finance Minister Lim Guan Eng.
He said the cabinet had, on Wednesday, accepted an offer by MRT2 project delivery partner (PDP) MMC-Gamuda joint venture to complete the aboveground portion of the project as a turnkey contractor at a cost of RM17.42 billion, versus the original cost of RM22.64 billion.
He said the savings would be realised through a reduction in cost and rationalisation of work scope without cancelling any above-ground stations.
“The Pakatan Harapan government holds steadfastly to obtaining ‘value for money’ on all government expenditure, especially when large borrowings are required to complete any project.
“The billions of ringgit saved will reduce debt and interest the Federal Government needs to repay, which ultimately will be borne by the rakyat through future taxes.
“There is a RM5.22 billion or 23 per cent savings made from the above ground portion of the MRT2 project. More savings will be gained when the underground portion is re-tendered soon.
“Furthermore, the expected cost reduction of the MRT2 project will lower the fares that passengers have to pay, and boost public transport usage in the Klang Valley,” he said yesterday.
However, Lim said both the Federal Government and MMCGamuda had failed to reach an agreement on the underground portion of the project.
As a result, he said, the cabinet had decided to terminate the underground contract.
“All unfinished underground work will be re-tendered through an international open-tender process.
“This decision was made after considering that the Federal Government can achieve significant savings by re-tendering the underground work package compared with the offer by the existing contractor,” he said.
The MRT2 project was approved by the cabinet on Feb 26, 2014, with an estimated cost of RM28 billion.
However, the cost ballooned to RM56.93 billion after several factors, including the approval of a new line to Bandar Malaysia and the depreciation of the ringgit.