The govt has to seek a ‘middle ground’ solution as it will cost a hefty RM4.2b in compensation payout

by DASHVEENJIT KAUR / pic by MUHD AMIN NAHARUL

THE government plans to maintain the current Light Rail Transit Line 3’s (LRT3) project delivery partner (PDP) to avoid heavy compensation payout.

Finance Minister Lim Guan Eng said the government has to seek a “middle ground” solution as it will cost a hefty RM4.2 billion in compensation payout if a new tender were to be opened for a new PDP.

“The project was renegotiated as a fixed fee contract instead, which means the fee which was paid at 6% under the old rate to the PDP, does not exist anymore,” he said in the Dewan Rakyat yesterday.

He was responding to MP Datuk Seri Reezal Merican Naina Merican (BN-Kepala Batas) who suggested that the government should reopen a new tender as there are allegations that the current PDP had failed to discharge its fiduciary duties.

In September 2015, Prasarana Malaysia Bhd appointed MRCB George Kent Sdn Bhd — a joint-venture company between George Kent (M) Bhd and Malaysian Resources Corp Bhd — as the PDP for the implementation of the LRT3 project.

On July 14 this year, Prasarana issued a statement saying it was fully aware that the initial cost of LRT3 of RM10 billion was inadequate, and a substantial increase would be needed for the project to be completed.

Lim, however put the blame on Prasarana, the state-owned firm that is building the Bandar Utama-Klang line, for requesting an additional RM22 billion in funding, thus spiralled the whole project cost to a whopping RM31.45 billion.

“If that is a failure from the PDP’s side, why then in March, Prasarana itself requested to get additional funding?

“Such a move would only balloon the construction cost of LRT3. Hence, it is Prasarana’s oversight in the project,” he added.

Lim noted that the best way to work around the matter is to review the project and study on where the cost can be reduced, since LRT3 is a necessity and should not be stopped entirely.

“It is one of Pakatan Harapan government’s biggest success, as the main aim is to continue with the project but at a reduced cost,” he said.

Lim said among the key steps taken to reduce and rationalise the cost of the project are reducing the total number of orders from 42 sets of six-coaches to 22 sets of three-coaches and modifying the size and design of LRT stations according to the Kelana Jaya LRT ranks, rather than building it as large as mass rapid transit stations.

The government has also deferred the construction of five stations which are expected to have low passenger numbers and cancelled three other stations.

“We are extending the timeline to complete the LRT3 project from 2020 to 2024 to further reduce the construction cost that was originally raised to expedite the completion of the project,” he said.

The Cabinet had earlier approved the continuation of the LRT3 project at a final cost of RM16.63 billion.

Lim said the new figure is a 47% reduction from an earlier estimate of RM31.65 billion, thus saving RM15.02 billion.

He said the 37km line is aimed at alleviating traffic congestion along one of the most important and densely populated economic development corridors in the Klang Valley, from Klang to Petaling Jaya.

The LRT3 is expected to serve an area with a population of two million people, with the capacity to transport 36,700 passengers per hour each way.