Gamuda still down as MRT2 spat blows up
JV to adopt ‘open book’ approach if fresh talks called
PETALING JAYA: Shares in Gamuda Bhd and MMC Corp Bhd fell further, following uncertainties surrounding its involvement in the underground work of the mass rapid transit line 2 (MRT2) project, as the company continues to hold on to hopes of being called in to negotiate the contract.
MMC-Gamuda has pledged to adopt an “open book” approach if fresh negotiations can be held, while the political secretary to the finance minister, Tony Pua, fired an open letter critising MMC-Gamuda for trying to gain public sympathy.
As the spat became public, shares in Gamuda dropped 31 sen or 13% to RM2.07, while MMC Corp fell four sen or 3.5% to RM1.12.
Gamuda and MMC Corp have a 50-50 joint venture (JV) called MMCGamuda KVMRT (T) Sdn Bhd that has the mandate to complete the MRT2 project. In the last three days, there have been several statements on the MRT2 project by the Finance Ministry (MoF), MMC-Gamuda and Prime Minister Tun Dr Mahathir Mohamad.
Yesterday, Pua, the member of parliament for Damansara and political secretary to the MoF, stated in an open letter that the government was not terminating the MRT2’s underground work project and plans to award the work to a contractor that can do it at a lower cost.
Pua’s letter was in response to MMC-Gamuda’s statement that the underground portion of the project was 40% completed and it had already offered a RM2.3bil reduction in the price of the underground works that was awarded to the JV at a cost of RM15.47bil in 2016.
MMC-Gamuda cited various reasons why the termination of the underground works was not fair and even stated that up to 20,000 people could be out of a job should it happen. The government was guided by a local consultant in its decision, something which MMCGamuda felt was not appropriate. The JV wants an international consultant to assess the cost of the underground works in MRT2.
MMC-Gamuda was given the mandate to see the completion of the MRT2 as the project delivery partner in February 2014 at an initial cost of RM28bil.
After the change in government in May this year, the project came under review.
The MoF disclosed on Sunday that the cost had almost doubled to RM56.93bil due to various factors such as changes in the rail alignment and the depreciation of the ringgit to the US dollar.
Yesterday, in the open letter to the directors of MMC-Gamuda, Pua took aim at the JV for what he claims to be a campaign to paint the termination of its underground contract for the MRT2 as “hasty and ill-conceived”.
Citing a study by an independent engineering consultant, Pua said MRT Corp should expect total savings of between RM4.19bil and RM5.79bil for the estimated 60% portion of works that are yet to be completed.
However, he noted that MMCGamuda had only offered to reduce the contract value by RM2.13bil or 12.7% to RM14.58bil.
In his letter, Pua stood by the qualifications of the independent consulting engineer, which has a track record of 80 projects in 24 countries outside Malaysia.
He said the consulting engineer had exposed the lie that the cost of the MRT1 and MRT2 projects is well below the average construction cost of various Asian Metros.
He further attested that MMCGamuda had refused to share costing data with the consulting engineer to justify its cost, claiming trade secrets.
MMC-Gamuda, in a statement, said it hoped to be invited back to the negotiating table with the government after Dr Mahathir on Tuesday said he would reconsider the Cabinet’s decision to terminate the underground contract.
“It is our express hope that the government would invite us back to the negotiating table as part of that review process, and we shall adopt an open-book approach with the appointment of an international engineering consulting firm that possesses the necessary experience and track record in assessing tunnelling works around the world, and as such, be in the best position to re-examine where savings can be derived,” MMC-Gamuda said.
“We urge all stakeholders, especially our staff, subcontractors and suppliers, to remain calm, be patient and trust in the wisdom of our Prime Minister in his impending review process,” MMC-Gamuda said,
“Our request in return for the open-book approach is that our intellectual property rights and commercially sensitive information are duly respected as such, by the said reviewing consultant and all reviewing parties, during the review process.”