Prasarana gets go-ahead for LRT3 at reduced cost

Finance minister says final cost will save the govt a total of RM15b


Prasarana Malaysia Bhd has received the green light from the government to resume the Light Rail Transit 3 (LRT3) project at a 47% reduced cost of RM16.63 billion.

Finance Minister Lim Guan Eng in a statement said the final cost will save the government a total of RM15.02 billion.

“This will include all project costs, including work package contracts (WPC), land acquisition, project management, consultancy fees, operational and overhead costs, as well as interest during construction,” he said.

Lim said Prasarana submitted its latest estimation for the third rail project on March 30, 2018, which amounted to RM31.65 billion.

“Prasarana had, at the same time, sought an additional RM22 billion in the form of government guarantees, on top of the initial RM10 billion granted in 2015 to finance the project,” he said.

In a bid to reduce the project’s total cost, Lim said thorough renegotiation and rationalisation exercises were undertaken with all key stakeholders, including the project delivery partners (PDPs) and the government agencies involved.

“One critical criterion for the review was that the integrity of the 37km LRT3 line from Johan Setia in Klang to Bandar Utama in Petaling Jaya must be maintained,” he said.

The minister said the discussion covered the expectation of the safety, frequency and quality of service to meet the regulators’ requirements.

Lim said the construction nature will be restructured from a PDP model to a “fixed price contract” with Malaysian Resources Corp Bhd (MRCB)-George Kent (M) Bhd’s joint-venture entity, MRCB-GK JV, to prevent cost from increasing further.

“This will ensure a fixed price that will not be subjected to cost overruns.

“This would not only mean a massive reduction of RM15 billion in debt, but also yields in additional savings for the taxpayers of up to RM14 billion in interest over the period of the loan financing,” he said.

MRCB and George Kent were appointed by Prasarana as the project’s PDPs in 2015. Under the renegotiated terms, the trains have been reduced from 42 units of six car trains to 22 units of three car trains.

“Based on the feasibility study of the LRT3 project, the 22 units of three car trains are more than sufficient to cope with the anticipated passenger demand until 2035 before an additional three car trains needs to be ordered,” he said.

Lim said five stations with an estimated low ridership, namely Lien Hoe, Temasya, SIRIM, Bukit Raja and Bandar Botanic, will be shelved until the demand is higher.

The timeline for the project completion will be extended from 2020 to 2024 in order to further reduce the construction cost. The size of the rail depot will also be pared down.

The LRT3 spans 37km within the Klang Valley, with Bandar Utama in Damansara and Johan Setia in Klang to be the end stations.

It is meant to alleviate the issue of traffic congestion along the densely populated areas in the Klang Valley.

The rail link, with a capacity to transport 36,700 passengers per hour each way, is expected to cater to two million passengers.