PUTRAJAYA will be calling for an international open tender to pick a contractor to carry out the underground works for the Mass Rapid Transit 2 (MRT2) project, says Lim Guan Eng.

The finance minister says the decision was made after project delivery partner MMC-Gamuda and his ministry failed to reach agreement on cost reduction for the underground works.

“So, the Cabinet has decided for the underground works contract to be terminated. Works that are unfinished will be tendered out again via an international open tender.

“The decision was made after the Cabinet considered the additional savings the government can make by awarding the project via open tender, especially when the project involves a huge loan.

“Saving billions of ringgit will lessen the government’s burden to repay the debt and pay interests using money collected from taxpayers,” he said in a statement today.

Lim also says the government would be saving RM5.22 billion or 23% of the cost for the project’s surface works through cost and work scope rationalisation while maintaining all the stations.

He says MMC-Gamuda as the turnkey contractor had written letters to the government in August and last month regarding MRT2’s surface works with a reviewed cost of RM17.42 billion, instead of the initial RM22.64 billion.

The MRT2 project that links Sungai Buloh to Serdang and Putrajaya is owned by Mass Rapid Transit Corporation Sdn Bhd (MRTCo), a company fully-owned by the Finance Ministry.

The urban rail project was approved by the Cabinet in February 2014 with an estimated cost of RM28 billion, excluding consultation fees, project development partner fees, interests on loans and MRTCo’s operational costs.

The cost then escalated to RM56.93 billion due to the Railway Scheme approval involving a new alignment to Bandar Malaysia, change of scope, the depreciation of the ringgit and other factors.

Apart from a RM39.35 billion construction cost, RM6.18 billion is needed for land acquisition, RM360 million for feeder buses and depots, RM9.84 billion for interest costs during construction, and RM1.2 billion for other costs.

“The Finance Ministry with the cooperation of the Transport Ministry, MRTCo and the private sector has been negotiating to reduce the costs since May.

“An engineering consultant has been appointed to study the cost rationalisation,” Lim said. – October 7, 2018.