MMC-Gamuda-GKent a strong contender for MRT3

MRT Corp announces that 4 consortiums had submitted turnkey tenders with financing plans for the Circle Line


The MMC Corp Bhd-Gamuda Bhd and George Kent (M) Bhd (GKent) joint venture (JV) is potentially the strongest contender to undertake the proposed Mass Rapid Transit Line 3 (MRT3) project due to the experience and assets needed for the extensive tunnelling works required on the project, according to analysts.

RHB Research Institute Sdn Bhd believes the MMC-Gamuda-GKent consortium is a formidable contender for the lead role, banking on its experience and track record as project delivery partner (PDP) for the MRT1, MRT2 and Light Rail Transit Line 3 (LRT3) lines.

“MMC-Gamuda’s expertise in tunnelling work bodes well for its chances, as 80% of MRT3’s alignment would be underground,” RHB Research noted in a report on Monday.

The consortium members have under their belts experience as the PDP in two prior MRT lines, the LRT3, as well as tunnelling works for MRT1 and MRT2.

Tunnelling experience and the ownership of tunnel-boring machines are key advantages of the MMC-Gamuda-GKent JV, RHB Research added, considering that 80% of works are slated to be underground works and the remain- ing 20% are elevated works.

Project owner, Mass Rapid Transit Corp Sdn Bhd (MRT Corp), announced last week that four consortiums had submitted turnkey tenders with financing plans for the multi-billion ringgit MRT Circle Line as tender submissions closed on Jan 18.

Three out of four submissions comprised consortium of Malaysian companies including Sapura-TIEC Con- sortium, MMC-Gamuda- GKent JV and Pacific-Mudajaya-JEC Consortium.

The sole foreign contender is China Communications Construction Co Ltd-China Communications Construction Co (M) Sdn Bhd JV.

An evaluation will be made by MRT Corp based on the “Best Evaluated Tender” from the three main evaluation criteria — which are technical, financial standing and the financing package.

A recommendation will then be submitted to the Finance Ministry for decision and approval.

The contract is tentatively set to be awarded within the first quarter of 2018.

RHB Research added that the MRT3’s lead contractor would be responsible for both the turnkey tenders, as well as securing the financing for the project.

The financing required is significant with demanding conditions. The winning contractor must fund 90% of the RM40 billion project for 30 years with an eight-year moratorium.

“We understand that the MMC-Gamuda-GKent JV has in place a firm financing arrangement by a group of reputable financial institutions. The consortium members would prefer the financing to be off their balance sheets, acting more as intermediaries between MRT Corp and the financial institutions.

“This is reasonable in our view as MRT Corp remains the owner of the asset, and hence, liabilities should be on their books instead,” RHB Research added.

In terms of financing cost, RHB Research believes it would be difficult to match the 3.25% soft-loan rate for the East Coast Rail Link project, and more likely to be between the 10-year Malaysian Government Securities rate of 3.9% and quasi government bond rates, including Prasarana Malaysia Bhd or DanaInfra Nasional Bhd of 4.5%.

Hong Leong Investment Bank Bhd (HLIBB) also stated that the MMC-Gamuda-GKent JV stands out as the top contender, given its strong confluence of civil and systems track record.

“Track-record-wise, MMC and Gamuda (via a JV) has undertaken the PDP role and tunnelling works for MRT1 and MRT2. Apart from that, they have also partaken in the Northern Double Track and SMART tunnel.

“As for GKent, it previously completed the LRT extension system works and is now undertaking track works for MRT2 and the PDP role for LRT3,” HLIBB noted in a report on Monday.