MMC-Gamuda willing to bridge MRT2 cost expectations

By MARK RAO / Pic By TMR File

Gamuda Bhd noted it has yet to get a confirmation of termination of contract for the underground works for the Mass Rapid Transit Line 2 (MRT2) from the project manager.

In an exchange filing yesterday, Gamuda revealed that the Ministry of Finance (MoF) moved to terminate the contract after MMC-Gamuda joint venture (JV) failed to reach an agreement to reduce the RM16.71 billion in construction costs.

“There has been no official confirmation from MRT Corp Sdn Bhd that MMC-Gamuda JV has been terminated as the underground contractor.”

After cutting some RM5.2 billion of the cost on the above ground works, the 50:50 MMC-Gamuda JV failed to execute an agreement to reduce the cost of the underground package with the government despite offering to cut cost by 24% for the remaining underground works valued at RM9.6 billion.

“MMC-Gamuda JV has offered a reduction of RM2.3 bilion, which represents 24% of this value,” the Gamuda statement noted.

“The reduction is achieved through reducing the scope of works and lowering specifications for mechanical, electrical and architectural finishes of the stations.”

The company added that it reduced the number of entrances to stations and active stations to achieve the targeted cost savings, an exercise which will see four out of 10 stations shelved.

Gamuda said it was informed by the MoF that the RM2.3 billion cost reduction was inadequate, but noted the ministry did not convey an acceptable target figure.

“If the target figure is made known together with the components of the savings as individual items, both parties would be placed in a better position to re-examine these components from where savings could be derived and narrow the differences.”

It added that the appointment of an international engineering consulting firm would help facilitate this exercise.

“MMC-Gamuda JV remains open to further discussion with the MoF and is amenable to cooperate with the MoF in reaching an agreeable reduction,” it said.

“Our perception of the latest cost gap is that it is an amount which is not unbridgeable,” the statement said.