FINANCE Minister Lim Guan Eng today revealed that the final cost of the East Coast Rail Link (ECRL) project is now RM80.92 billion, an almost 80% hike from its original projected cost of RM46 billion.

The cost does not include its operating deficit, which cannot be determined for now, Lim said in a statement today.

“The final cost of the ECRL project is actually RM81 billion and must be reduced significantly to make it viable financially.

“The ECRL project is also not expected to cover its operating costs.”

Last month, Prime Minister Dr Mahathir Mohamad said the government is reviewing the terms of the ECRL project as it was too costly.

The project was first approved by the cabinet on October 21, 2016, while the engineering, procurement, construction and commissioning agreement was signed with China Communication Construction Company (CCCC) on November 1, 2016.

While the original project scope was to build a rail line from the Integrated Transport Terminal (ITT) Gombak in Selangor to Wakaf Bharu in Kelantan for RM46 billion, the cost of the project ballooned to RM66.78 billion by last August, Lim said.

On May 13, 2017, the Barisan Nasional administration signed an additional agreement with CCCC to carry out Phase 2 of the project, which was to extend the line from ITT Gombak to Port Klang for RM9 billion.

Just 10 days earlier, Lim said, the cabinet approved the northern extension of the project from Wakaf Bharu to Pengkalan Kubor in Kelantan, at RM1.28 billion.

“Subsequently on August 23, 2017, the cabinet further approved the upgrading of the ECRL to a double-tracking project which would cost an additional RM10.5 billion.

“Based on these figures, the basic cost of construction of the 688.3km rail line amounts to RM66.78 billion.

“However, the total cost of the ECRL will be RM80.92 billion after taking into account land acquisition, interest, fees and other operational costs,” he said.

To date, the government via its wholly owned operating subsidiary, Malaysia Rail Link Sdn Bhd (MRL), has paid CCCC RM19.68 billion, comprising of an advance payment of RM10.02 billion and a progress payment of RM9.67 billion.

“Based on the above facts and figures, as well as the feasibility studies of the project, we expect that the ECRL project will only become financially and economically feasible if there is a drastic price reduction of the project by CCCC,” he said in the statement.

Lim said the government will be holding cost-cutting discussions with the contractors and others involved in the project.

The Selangor government also objects strongly to the completion of Gombak-Port Klang portion of the rail line based on the state’s application to establish the 16km Klang Gates Quartz Ridge, which is the longest of its kind in the world, as a Unesco World Heritage site.

“Completing the Gombak-Port Klang link would guarantee the failure of Selangor’s application.

“Only after a significant price reduction on the ECRL is obtained will the federal government enter into discussions with the Selangor government on the merits of the ECRL project as compared to the possible Unesco World Heritage site listing,” said Lim. – July 3, 2018.