ECRL contractor ordered to suspend work

by NG MIN SHEN / pic by MUHD AMIN NAHARUL

CHINA Communications Construction (ECRL) Sdn Bhd confirmed that it has received a notice to suspend all work on the East Coast Rail Link (ECRL) from Malaysia Rail Link Sdn Bhd (MRL), the owner of the project.

In a statement yesterday, the unit of China Communications Construction Co Ltd (CCCC) said it regrets that “the suspension comes at this junction, as substantial work has been progressing well”.

It said the ECRL is an important project of Malaysia’s that will benefit the people and economic development along the route.

“CCCC was entrusted to conduct the project as the engineering, procurement, construction and commissioning (EPCC) contractor to assist in infrastructure construction in Malaysia. The contract has been signed by CCCC and MRL via legal processes. We hope MRL will honour and respect the contract signed,” the statement from the company read.

“We respect and comply with Malaysian laws. Under the situation, we have no choice but to adhere to the suspension instruction,” it stated.

While the duration of the suspension has not been specified, the company is concerned about incurring additional cost, losses and damages arising from the suspension.

“We are upset and concerned about the livelihood of our 2,250 local staff, as well as several hundred sub-contractors, suppliers and consultancy firms,” it added.

It wishes for both sides to be able to find a win-win solution through “sincere negotiation with good will”, adding that it hopes the suspension will be lifted as soon as possible for the benefit of all parties.

The ECRL is among several mega projects being reviewed by the current government, in this case due to the cost of undertaking the ambitious railway link that forms part of China’s “One Belt, One Road” initiative.

Under the previous administration, the 688.3km project — which would pass through Selangor, Pahang, Terengganu and Kelantan — was said to have an estimated cost of around RM55 billion.

However, Finance Minister Lim Guan Eng (picture) on Tuesday revealed that the true cost of the project, including land acquisition and financing, stands at RM80.92 billion.

He added that the project cost does not include the operating deficit — which cannot yet be determined — and that the project will only become financially and economically feasible if there is a drastic price reduction of the project by CCCC.

According to Lim, the project was first approved by the Cabinet on Oct 31, 2016, while the EPCC agreement was signed with CCCC on Nov 1, 2016.

The original project scope involved building a rail line from the Integrated Transport Terminal (ITT) Gombak in Selangor to Wakaf Baru in Kelantan at a cost of RM46 billion.

On May 13 last year, the previous government then signed an additional agreement with CCCC to undertake Phase 2 of the rail link, which entailed extending the line from ITT Gombak to Port Klang for RM9 billion.

The Cabinet had also approved the northern extension of the project from Wakaf Baru to Pengkalan Kubor in Kelantan for RM1.28 billion on May 3.

On Aug 23, 2017, it further approved upgrading the ECRL to a double-tracking project which would cost an additional RM10.5 billion.

Lim said the basic cost of construction based on the above figures amounts to RM66.78 billion. However, the figure stands at RM80.92 billion after accounting for land acquisition, interest, fees and other operational costs.

He said the government via MRL has paid CCCC a total of RM19.68 billion to date, comprising a RM10.02 billion advance payment and a RM9.67 billion progress payment.