Positive on MRT3 progress despite 10-year construction period
KUALA LUMPUR: Analysts are positive about the MRT Circle Line’s (MRT3) progress, in spite of the stretched out construction period of 10 years, as it could offer an upside surprise for the construction sector in general.
Following the reveal of MRT3’s plans, the research team at Kenanga Investment Bank Bhd (Kenanga Research) was net positive on the new details as behind-the-scene progress is picking up fast.
“Despite the stretched out construction period of 10 years –should our guesstimate contract quantum of RM32.9 billion be proven accurate – it would be an upside surprise,” it said in a note yesterday, adding that tenders are expected to be out as early as August this year.
“We anticipate the awards will likely be out earliest in the first half of 2022 (1H22) after considering the submission and evaluation process of tenders,” it added.
Despite the government’s commitment in supporting the project, Kenanga Research saw that MRT Corp is exploring 10 to 30 per cent private funding arrangements to alleviate the country’s fiscal burden.
“From this aspect, we believe a deferred payment scheme (of 10 to 30 per cent of total contract cost) can be adopted to conserve government’s cash flows,” it added.
The MRT3 is expected to have about 30 stations and 10 interchanges spanning 50km. Despite the revealed alignment being similar to the one available in the 2040 KL structure plan, the research team noted that the indicated length of 50km is longer than the 40km initially expected.
Out of the 50km, 40 per cent (20km) will be underground (UG) – higher than the previous expectations of 25 to 30 per cent.
The MRT3 project is expected to be rolled out in five phases over 10 years.
“The construction period is now longer than the previous seven-year expectation. That said, the first phase will be rolled out within five to seven years from the start of construction,” Kenanga Research continued.
It noted that beneficiaries of the project could be Gamuda and Kimlun given their expertise in major infrastructure projects such as this.
It also believed IJM Corporation Bhd and Malaysian Resources Corporation Bhd stand a good chance to undertake a bigger role in MRT3 given their relatively bigger and stronger balance sheet which enables them to gear up to provide funding needs.