Lim: A mega project with a mega debt

Minister explains decision to review ECRL project

THE Government’s decision to review the East Coast Rail Link (ECRL) is not only to manage the construction cost, but also the viability in maintaining the rail network, says Finance Minister Lim Guan Eng.

He said it must be noted that the operational cost of ECRL would be very high to cover the project cost.

“Don’t even talk about capital expenditure as we can’t even cover the operational cost which is estimated to be RM600mil to RM1bil annually,” he said when replying to a supplementary question by Thomas Su (PH-Kampar) in Parliament yesterday.

Lim said a review was needed so that the government would not be saddled with a huge debt.

“It is a mega project that will result in a mega debt,” he added.

He informed lawmakers that negotiations between the Government and the main contractor of the project, China Communications Construction Co Ltd (CCCC), were still ongoing.

Although there had been some headway in negotiations following Tun Daim Zainuddin’s recent visit to China, Lim said no common point had been reached.

“The viability and feasibility of the project remains the biggest question,” he said.

Earlier, when answering a question by Datuk Seri Dr Ismail Abd Muttalib (BN-Maran), Lim assured him that the Government would adhere to the provisions under the Land Acquisition Act for land which had been acquired for ECRL.

On the fate of staff who were retrenched, Lim said the government would assist only Malaysians affected following suspension of the project.

He said the government suspended the project and issued an immediate stop-work order on July 3 following the Attorney General’s advice.

This was done to avoid the government having to pay progressive pay- ments to the Chinese contractors, he added.

Lim told the House that the actual cost of the project was RM80.92bil, and not RM55bil as announced by the previous administration.

So far, he said the government, through project owners Malaysia Rail Link Sdn Bhd, had paid RM19.68bil to CCCC as progressive payment for completing 15% of the project.

The 688km ECRL project was launched on Aug 9, 2017, and scheduled for completion in 2024.

Under the loan agreement signed in November 2016, China’s ExportImport Bank will provide 85% of the financing, with Malaysia forking out the remaining 15%.

The first phase of the project was to connect Gombak, Selangor, and Tumpat, Kelantan, with the second phase linking Gombak and Port Klang.

It is estimated that some 1,000 staff members out of 2,250 had been laid off after the project was suspended in early July.