Ma­hathir says Chi­nese con­trac­tor will help run new rail link

Sun.Star Pampanga - - WORLD! -

PU­TRA­JAYA, Malaysia (AP) — Prime Min­is­ter Ma­hathir Mo­hamad said Mon­day a Chi­nese com­pany build­ing a rail link across penin­sula Malaysia will jointly help to man­age, op­er­ate and main­tain the net­work that will help re­duce the coun­try’s fi­nan­cial bur­den.

The East Coast Rail Link was sus­pended af­ter Ma­hathir’s al­liance swept into power last May, a de­ci­sion that strained Malaysia’s re­la­tions with China, its largest trad­ing part­ner. The project was re­vived last week af­ter the con­trac­tor, state-owned China Com­mu­ni­ca­tions Con­struc­tion Com­pany Ltd., agreed to cut the cost by one-third to 44 bil­lion ring­git ($10.7 bil­lion).

The rail link con­nect­ing Malaysia’s west coast to eastern ru­ral states is a key part of China’s Belt and Road in­fra­struc­ture ini­tia­tive.

Ma­hathir said Mon­day the gov­ern­ment chose to rene­go­ti­ate the deal rather than pay com­pen­sa­tion of 21.78 bil­lion ring­git ($5.3 bil­lion). He said the fact that the project cost can be re­duced sharply by 21.5 bil­lion ring­git ($5.2 bil­lion) showed that the cost had been in­flated when for­mer Prime Min­is­ter Na­jib Razak’s gov­ern­ment awarded the main con­tract to CCCC in 2016.

The rail project will now cost 68.7 mil­lion ring­git ($16.7 mil­lion) per kilo­me­ter, down from 95.5 mil­lion ring­git ($23.2 mil­lion) pre­vi­ously, he said.

Un­der the new deal, Ma­hathir said CCCC will form a 50:50 joint ven­ture com­pany with Malaysia Rail Link to pro­vide tech­ni­cal sup­port and share the op­er­a­tional risk. He said CCCC’s in­volve­ment as rail op­er­a­tor will help at­tract Chi­nese in­vest­ment along the rail link cor­ri­dor.

CCCC has also agreed to re­fund part of a 3.1 bil­lion ring­git ($753.4 mil­lion) ad­vance pay­ment, with 1 bil­lion ring­git ($243 mil­lion) to be paid over the next two months, he said.

Although the rail project will be short­ened by 40 kilo­me­ters (24.8 miles) to 648 kilo­me­ters (402.6 miles), he said the dou­ble-track line will have 20 sta­tions and cut through five states, in­stead of four pre­vi­ously. He said the new align­ment will also mean avoid­ing hav­ing to tun­nel through a moun­tain range in cen­tral Se­lan­gor state, which is the long­est pure quartz dyke in the world.

The project, which is now slated for com­ple­tion by the end of 2026 in­stead of 2024, is largely fi­nanced by China.

Ma­hathir said the gov­ern­ment is still ne­go­ti­at­ing the loan amount with China’s EXIM Bank but that it will be re­duced sub­stan­tially and this will re­sult in pay­ing less in in­ter­est on the loan.

He said the gov­ern­ment is also “tak­ing ad­van­tage of the agree­ment to work out the pur­chase of palm oil by China,” but didn’t give fur­ther de­tails.

Of­fi­cials said work on the rail link could re­sume by next month.

Ma­hathir’s gov­ern­ment has axed or re­viewed large-scale in­fra­struc­ture projects to rein in surg­ing na­tional debt that it blames mostly on cor­rup­tion in the pre­vi­ous gov­ern­ment.

Apart from the rail link, the gov­ern­ment last year also can­celled two China-backed pipe­lines cost­ing 9.3 bil­lion ring­git ($2.3 bil­lion) af­ter dis­cov­er­ing that 90 per­cent of the project’s costs had been paid but only 13 per­cent of work had been com­pleted.

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