RM15b SAVINGS

PETALING J AYA: The Cabinet has approved the continuation of the Light Rail Transit 3 ( LRT3) project at a final cost of RM16.63 billion – 47% lower than the RM31.65 billion projected by Prasarana Malaysia Berhad.

Finance Minister Lim Guan Eng said yesterday the RM15.02 billion savings will be achieved through several key steps that include:

shelving the construction of five stations – Lien Hoe, Temasya, SIRIM, Bukit Raja and Bandar Botanic – that have very low projected passenger ridership, until demand deems it necessary for them to be built;

reducing the order of 42 sets of six-car trains to 22 sets of three-car trains as a feasibility study shows this will be more than sufficient to cope with anticipated passenger demand until 2035;

reducing the size of the LRT train depot to be constructed due to the significantly reduced number of trains to be acquired;

streamlining the size and design of the stations based on Kelana Jaya LRT line standards instead of being benchmarked against the much larger MRT stations;

cancelling an unnecessary 2kmt unnel f or t he LRT and an underground station in Persiaran Hishamuddin, Shah Alam; and

extending the completion time for the project from 2020 to 2024 to reduce construction costs that was inflated due to “acceleration costs”

(additional costs incurred to speed up the project).

“The savings of more than RM15 billion would not only mean a massive reduction of RM15 billion in debt to be incurred, but will also result in additional savings to tax-payers of up to RM14 billion in interest cost over the period of the loan financing,” Lim ( pix) said in a statement yesterday.

“The 47% reduction in cost demonstrates the new government is walking the talk in securing significant cost reductions for excessively-priced projects caused by the poor governance of the previous government.”

This resulted from a thorough renegotiation and rationalisation exercise of the project with all key stakeholders, including Prasarana, MRCBGeorge Kent joint venture (MRCB-GK JV), which is the project delivery partner (PDP) and the Land Public Transportation Commission (SPAD).

The final cost will include all project costs, including but not limited to work package contracts, land acquisition, project management, consultancy fees, operational and overhead costs, as well as interest during construction.

Lim said a criteria for the review was that the integrity of the 37km LRT3 line must be maintained as it is critical to alleviate traffic congestion along one of the most important and densely populated economic development corridors in the Klang Valley, from Klang to Petaling Jaya.

“The safety, frequency and quality of service must also meet the requirements of the regulators,” he said, adding that the new line is expected to serve two million passengers, with the capacity to transport 36,700 riders per hour each way.

Lim said the project will also be restructured from a PDP model to a “fixed price contract” with MRCB-GK JV, to ensure that the price will be fixed and not subjected to cost overruns,.

On Wednesday, Lim had said the government received offers to half the cost of the Singapore-Kuala Lumpur High Speed Rail project. He told Singapore Straits Times that the government may consider resuming the project if the initial cost of RM110 billion was lowered by half, but said formal proposals had yet to be received.