MMC-Gamuda retains MRT2 underground works


The cost for the Mass Rapid Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) underground works has been slashed further to RM13.11 billion.

The Ministry of Finance (MoF) said in a statement that MMC-Gamuda KVMRT (T) Sdn Bhd will also continue to be the contractor for the MRT2 underground works, as the previous decision to terminate the contract would be rescinded.

“The total cost of construction — for both above ground and underground — will have been reduced by RM8.82 billion (or 22.4%) from RM39.35 billion to RM30.53 billion,” the MoF’s statement read.

The Cabinet on Oct 3, 2018, had approved the continuation of the above ground MRT2 works to be executed by MMC-Gamuda as the turnkey contractor with a cost of RM17.42 billion compared to the original cost of RM22.64 billion. The figure represents a saving of RM5.22 billion or 23%.

In the same announcement, the Cabinet decided to terminate the RM16.71 billion underground contract and to retender the remaining works, as the government and MMC-Gamuda had failed to come to an agreement on the reduced cost for the underground portion. After an appeal by MMC-Gamuda, the Cabinet had agreed to a renegotiation.

A fresh round of talks was carried out on Oct 22, 2018, conducted by Finance Minister Lim Guan Eng personally, with MMC-Gamuda agreeing to a total reduction of RM3.6 billion (or 21.5%) for the underground works.

“This means that the construction cost — excluding interest during construction, land acquisition costs and other costs — of MRT2 has been successfully reduced by RM8.82 billion or 22.4% from RM39.35 billion to RM30.53 billion,” the MoF stated.

It added that all above-ground stations will continue to be built as planned earlier, while two underground stations — Bandar Malaysia (North) and Bandar Malaysia (South) — will be postponed, bringing the total number of stations from the original 35 to 33 now.

The MoF said the government is committed to getting value for money for all its expenditures, especially when the projects involve large amounts of debt.

“The final cost savings of RM8.82 billion or 22.4% for MRT2 will reduce future fares that need to be paid by MRT users, which would inadvertently increase the usage of public transportation in the Klang Valley,” the MoF added.

The MRT2 line, which stretches from Sungai Buloh to Serdang and Putrajaya, was awarded on Feb 24, 2014, with an initial cost of RM28 billion, which did not include consultant fees, interest costs and overhead cost for Mass Rapid Transit Corp Sdn Bhd — the asset owner.

MMC-Gamuda was appointed the project delivery partner by the government. The cost of the project had ballooned to RM56.93 billion due to a new line extension to the proposed Bandar Malaysia project, a change in scope and a weaker ringgit, among other factors.

MMC Corp Bhd’s shares closed at RM1.16 last Friday after the announcement, an increase of four sen or 3.57% from its previous close, giving it a market capitalisation of RM3.53 billion.

Gamuda’s shares closed at RM2.47 last Friday, 15 sen or 6.47% higher from its previous close, with a market capitalisation of RM6.1 billion.