MMC-GAMUDA’S refusal to further cut the cost of developing the underground section of the MRT2 project, which could have been reduced by at least RM2 billion more, was why the government had terminated its contract, said Tony Pua.

In an open letter to the directors of MMC-Gamuda, Pua said MMC-Gamuda had agreed in a  September 7 meeting, to reduce the price of the underground contract to RM14.58 billion, for a total cost savings of RM2.13 billion.

Pua said a study by an independent engineering consultant had found that the government should be able to save RM4.19 to RM5.79 billion in the estimated remaining 60% portion of works.

However, MMC-Gamuda directors at a meeting with finance minister Lim Guan Eng had refused to further lower their cost.

Pua, who is Lim’s political secretary, said the Pakatan Harapan government decided then to terminate the underground contract with MMC-Gamuda to “honour the mandate and trust the people has given us and maximise the savings we can reasonably derive from the project”.

He slammed MMC-Gamuda’s “obvious brazen attempt to paint yourself an innocent victim” and said the open letter was meant to set the record straight on negotiations between the finance ministry and the infrastructure development company which had led to the termination of a part of the contract.

On Sunday, the Finance Ministry announced a new international tender consequent of the termination of MMC-Gamuda’s contract for the underground portion of the MRT2. 

This was after two months of negotiations between the consortium and the government over costs failed to yield result.

MMC-Gamuda retains the contract to complete the aboveground sections of the MRT line that will connect Sg Buloh to Serdang and Putrajaya.

Pua said it was the new government priority to ensure all agreements and projects undertaken were fairly priced, adding that it would be a disservice to the people if it proceeded with the plan with MMC-Gamuda.

“RM2 billion can pay for five hospitals, or 50 schools.

“RM2 billion is hell of a lot of money when I see my MoF colleagues who are struggling and scrimping to find RM50 million savings here, and RM80 million cuts there for the upcoming budget,” wrote Pua.

Following the termination announcement, MMC-Gamuda issued a letter claiming it had been  awaiting an offer from the ministry when it was caught off-guard by the scrapping of the contract.

The company said some 20,000 employees could lose their jobs because of the government’s decision, and had also questioned the qualifications of the independent engineering consultant engaged by the government to assess costs.

This prompted Prime Minister Dr Mahathir Mohamad to announce the government would review its decision to cancel the contract in consideration of the jobs at stake.

In his letter today, Pua reiterated the finance minister’s statement that the Malaysian government was not terminating the project and urged all MMC-Gamuda employees affected by the cancellation to channel their frustrations at their bosses, and not the government.

“You will find plenty of opportunities when the new project is awarded at a lower cost, while the savings generated would mean even more projects for the future,” Pua said.

“But perhaps, instead of starting a petition on Change.org to seek the government to reverse its decision on the termination, it might be more productive to start a petition to ask your bosses at MMC-Gamuda to make the Malaysian government an offer they cannot refuse.” – October 10, 2018.