MMC-Gamuda in the dark over MRT2 underground deal

Updated 7 years ago · Published on 8 Oct 2018 6:35PM · 5 Comments

The Kuala Lumpur MRT project was the first to use the variable density boring machine for the underground portions of the multi-billion-ringgit project in 2013. The second phase of the project is now facing delays as the cost escalates. – EPA pic, October 8, 2018.

MMC-GAMUDA, the developer of the Mass Rapid Transit Line 2 (MRT2), said it has not received official confirmation of the Finance Ministry’s decision to cancel and issue a new tender for the underground portion of the project.

It also offered a RM2.3 billion reduction in cost on the uncompleted portion of the underground tunnelling during negotiations with Putrajaya over the last two months, it said in a statement today.

“The underground works awarded contract price is RM15.47 billion. As progress achieved is now 40%, the balance of the uncompleted underground works is now valued at RM9.6 billion,” it said.

“MMC-Gamuda offered a reduction of RM2.3 billion, which represents 24% of this value. 

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

“It was also achieved by reducing the number of entrances to stations and the number of active stations constructed. From a total number of 10 stations, four will be shelved,” the company said today in a statement.

The firm said the price of the underground works was influenced by requirements that increased the scope of works significantly.

“During the initial tender process, MMC Gamuda submitted an alternative proposal with savings by reducing the prescriptive requirements without compromising the safety, performance and functionality of the operational railway. 

“However, MRTCo elected not to accept the alternative offered by MM-Gamuda.”

The cost is also because of the need to tunnel through extreme karstic limestone in the city centre and threading the tunnels through high-end properties.

Gamuda Bhd shares lost 25.86% and opened at RM2.38 today, following Putrajaya’s announcement yesterday that it had terminated the company’s contract to build the underground portion of MRT2.

Finance Minister Lim Guan Eng said yesterday that an international open tender would be called to appoint a contractor for the underground works after the ministry and MMC-Gamuda failed to reach agreement on cost reduction for the underground works.

The company said axing the contract will immediate lead to 20,000 job losses, including a number of Bumiputera workers.

The termination would also expose MMC-Gamuda to compensation suits from terminated employees, sub-contractors, suppliers, manufacturers and others.  – October 8, 2018. 

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Comments

  • It also offered a RM2.3 billion reduction in cost on the uncompleted portion of the underground tunnelling...
    Imaging if there wasn't a change of government this greedy company has already assured of extra 2.3 billion in their account. Should ban them from future project.

    Posted 7 years ago by Chee yee ng · Reply

  • Imagine MMC-Gamuda can give a reduction of RM2.3 billion from the total costs.. this is not only outrageous but also criminal. That is a hefty sum for a discount!! Making profits is one thing, but this is ridiculously criminal.
    MACC, Auditor-General should investigate this MMC & Gamuda and ban it from rendering future projects.. Not only that but trace which DUMNO/BN warlords are connected to them..
    All BN crony companies are milking the nation dry!!

    Posted 7 years ago by Thiruchelvam Thirunavukarasu · Reply

  • Those with vested interests in the status quo are rarely appreciative of radical reform! Not easy to govern a country without being pressured into becoming more & more corrupt. The day must come when humans will be forced to reassess their perception of reality itself... or make themselves extinct or irrelevant. In the meantime, we may have to accept many compromises - but let us be guided by win-win formulas at every turn.

    Posted 7 years ago by Antares Maitreya · Reply

  • RM2.3b is not a discount but a reduction in scope. This means the tunnel is still wau overpriced because no one was looking at the scope prior to this. Has MRTCo looked at different scenarios including cash flows when considering MMC-Gamuda? Was RM15.47b the best value for money?

    Posted 7 years ago by Roger 5201 · Reply

  • Hello, this is a straight forward business decision. Don't bring bumiputra equation into the story!

    Posted 7 years ago by Teh Ewe Leng · Reply