CHINA has offered to nearly halve the cost of the East Coast Rail Link to save the centrepiece of its infrastructure push in southeast Asia, two sources told Reuters news agency today.

However, conflicting statements made over the past week on the status of the ECRL underscore the political and diplomatic challenges facing the government of Prime Minister Dr Mahathir Mohamad in renegotiating the contract.

“If it was just about the cost, China has offered a big reduction on the cost, as much as around half,” one of the sources privy to the talks was quoted as saying in the report.

The report quoted sources as saying contractor China Communications Construction Co Ltd (CCCC) had offered to cut construction costs of RM67 billion (US$16.39 billion) for the 688km rail line by as much as half.

Over the weekend, Economic Affairs Minister Azmin Ali and Finance Minister Lim Guan Eng made contradictory statements on the project.

Azmin said the ECRL was cancelled because the country could not afford the RM500 million annual interest on the project.

Lim , when asked about the announcement, said he was surprised about Azmin’s announcement, stating that the PKR deputy president was not present during the last cabinet meeting last Thursday.

However, on Tuesday Prime Minister Dr Mahathir Mohamad said Putrajaya had not made a final decision on the ECRL.

 “No final decision has been made. Not off yet. No call off, no final decision yet,” Dr Mahathir told reporters after a Bersatu supreme council meeting.

Asked if he could explain the conflicting remarks made by Azmin and Lim, Dr Mahathir blamed the media for misinterpreting the ministers.

“There is no conflicting information but the media said it differently.

“What happened was both Azmin and Lim were correct but the timing was wrong. The cabinet minister was saying something else and the media said it something else,” he added.

Dr Mahathir said Malaysia and China will come up with a solution.

“Both sides will come up with a solution and Lim Guan Eng will make the announcement when he has completed his negotiation.

Dr Mahathir had said earlier Putrajaya was not out to frustrate China or renege on its contracts.

“We are burdened by very heavy debts and have to cut back on some expenditure incurred by the previous government.

“It is not that we don’t want to honour our contracts, but we just cannot pay. This contract may cost us more than RM100 billion and will impoverish us.

“As such, we seek the understanding of the parties concerned.

“We don’t want to frustrate or throw out a contract, but we are really tight in terms of finance,” Dr Mahathir said. – January 31, 2019.