MRCB and GKent shares rise on confirmation as PDP for LRT3

PETALING JAYA: Shares in Malaysian Resources Corp Bhd (MRCB) and George Kent (M) Bhd (GKent) rose after Finance Minister Lim Guan Eng confirmed that they would remain as the project delivery partner (PDP) for the light rail transit three (LRT3) project.

MRCB saw its share price increasing by more than 5% to close at 79.5 sen, while GKent increased more than 4% to RM1.45 a share.

Lim pointed out that the government and Prasarana Malaysia Bhd had renegotiated the 6% fees for the PDP, which amounted to RM948mil.

“The payments will now be based on a fixed fee contract, which is tied to fixed costs, and this means the 6% fee term does not exist,” he said.

Lim assured that the 37km LRT3 project would go ahead, but with massive cost-cutting measures.

The billion-ringgit rail project has been under scrutiny because the construction cost had ballooned past its government approved budget of RM9bil.

The LRT3 project is the first undertaken by Prasarana via the PDP model. Under the model, the PDP would deliver the project within cost and schedule in return for a fee.

On July 10, the Ministry of Finance (MoF) disclosed that the actual cost had gone up to RM31.65bil, and that the project owner Prasarana had to cut the cost if the project were to continue.

On July 12, the MoF announced that after a thorough renegotiation and rationalisation exercise taken with all the stakeholders, including Prasarana and MRCB-GKent, the cost of the LRT3 has been set at RM16.63bil.

When the LRT3 project was first announced in Budget 2016, the cost was estimated at RM10bil. Late last year, speculation was rife that the cost had gone up to RM15bil.

However, it came as a surprise to even the contractors that Prasarana had estimated the total cost to be RM31.65bil.

The figure was disclosed to the MoF when Prasarana sought additional funding to the tune of RM22bil on March 30 this year.

Among the major changes to the design of the LRT3 project are reducing the 42 sets of six-car trains to 22 sets of three-car trains, shelving five stations, cancelling a tunnel that the train would run through and extending the time to complete the project from 2020 to 2024.

The main civil work package contractors are Mudajaya Group Bhd, TRC Synergy Bhd, Sunway Construction Group Bhd (SunCon), WCT Holdings Bhd and Gabungan AQRS Bhd.

Shares of all these counters also went up yesterday. Mudajaya closed 6.6% higher to 56.5 sen, TRC increased 3.7% to 56 sen, SunCon rose 1.6% to RM1.93, while WCT and Gabungan ended higher by 2.1% to 98 sen and RM1.44, respectively.