MMC-Gamuda To Continue Underground MRT2, With Further Cost Cuts

KUALA LUMPUR, Oct 26 (Bernama) -- The Ministry of Finance (MoF) announced Friday that MMC-Gamuda would continue the Mass Rapid Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) project with a larger cost reduction for the underground works. Its Minister, Lim Guan Eng said the decision was made after the final round negotiations which resulted in MMC-Gamuda agreeing to increase the cost reductions of the underground works to RM3.6 billion from RM2.13 billion. This brings the total cost of the underground works to RM13.11 billion. “This means that the construction cost (excluding interest during construction, land acquisition costs and other costs) of MRT2 has been successfully reduced by RM8.82 billion or 22.4 per cent from RM39.35 billion to RM30.53 billion,” he said in a statement here, Friday. MMC-Gamuda had previously agreed to cut the cost of the above-ground works by RM5.22 billion, which was accepted by the MoF. However, its offer to reduce underground works cost by only RM2.13 billion was rejected by the MoF and decision was made for the contract to be terminated and be re-tendered. Friday, the Cabinet agreed to MMC-Gamuda’s new offer and the cost rationalisation exercise. Lim said all above-ground stations would continue to be built as planned earlier, while two underground stations -- Bandar Malaysia (North) and Bandar Malaysia (South) -- would be postponed, bringing the total number of stations from the original 35 to 33. To recap, the Mass Rapid Transit (MRT) project is a strategic Government project which will increase connectivity of the Klang Valley’s public rail network. The MRT2 project will fulfill the needs of Klang Valley residents who are not yet connected to the rail network. It offers MRT services to a very highly populated corridor connecting Sungai Buloh to Serdang and Putrajaya. The Cabinet, on Oct 3, 2018, approved the continuation of the above ground MRT2 works to be executed by MMC-Gamuda as a turnkey contractor at the cost of RM17.42 billion compared to the original cost of RM22.64 billion, representing a saving of RM5.22 billion or 23 per cent. In the same announcement, the Cabinet had decided to terminate the RM16.71 billion underground contract and to re-tender the remaining works. This is due to the Government and MMC-Gamuda failing to come to an agreement on the cost for the underground portion. The MoF extended its appreciation to Prime Minister Tun Dr Mahathir Mohamad for his attention on the matter, which resulted in renegotiation and subsequently’s today’s decision to continue the underground works with MMC-Gamuda. Lim said the Government is committed to getting value for money for all its expenditures, especially when the projects involved large amount of debt. “The final cost savings of RM8.82 billion or 22.4 per cent for MRT2 will reduce future fares that need to be paid by MRT users, which would inadvertently increase the usage of public transportation in the Klang Valley,” he added. In a filing with Bursa Malaysia, Gamuda Bhd reiterated that the decision to terminate MMC Gamuda KVMRT (T) Sdn Bhd, a 50 per cent joint-venture company between Gamuda and MMC Corporation Bhd, has now been rescinded by the Cabinet. “The Cabinet has accepted MMC-Gamuda’s new offer wherein the entire remaining works (for both above ground and underground) shall be carried out on a turnkey contract basis for an agreed lump sum construction cost of RM30.53 billion,” it said. -- BERNAMA