Hot on the heels of Prasarana

GOVERNMENT-OWNED Prasarana Malaysia Bhd has been in the news this week after the Finance Ministry (MoF) called for drastic cost reduction for its LRT3 project.

With the national debt well over a trillion ringgit, this is much needed and as some will attest, Prasarana, which was supposedly set up to manage public transportation in Malaysia, has somehow veered from this objective.

It has reportedly chalked up billions in debts since its establishment in 2003, partly because it went into overseas projects in Saudi Arabia.

As a unit of the MoF, all of Prasarana’s costs, debts and overall financial obligations are Malaysia’s concerns. And its lack of efficiency – if its debt position is anything to go by – should stop.

Prasarana president and CEO Masnizam Hisham, who has been in the job for six months, must step up her efforts to revamp Prasarana.

Back to the LRT3 project, the MoF said it would withhold its support for extra funding unless Prasarana finds a way to slash the total cost of the project, which currently stands at a whopping RM31.45bil.

The projected total cost of the LRT3 of RM31.45bil due to poor management by Prasarana requires drastic cost reductions to make the LRT3 feasible and cost-effective, Finance Minister Lim Guan Eng has said.

In 2015, Prasarana appointed Malaysian Resources Corp Bhd (MRCB) and George Kent (M) Bhd (GKent) as the project delivery partner for the LRT3.

A total of RM9bil was for construction cost and there was an allocation of up to RM1bil for land acquisition.

Notably, Prasarana had in 2015 secured a government guarantee for a RM10bil bond facility to fund the LRT3 project.

However, on March 30, 2018, Prasarana had requested for an additional RM22bil in government guarantee to ensure funding for the construction and completion of the LRT3 project.

The additional amount quite obviously does not sit well with the new Pakatan Harapan government.

This episode of how broadband service in Malaysia has been tackled is a lesson to most. The dismantling of monopolistic services is essential in giving better service and lowering cost and that is what is needed for the betterment of consumers.