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Tuesday September 15, 2009

RM7b LRT extension

Prasarana to start construction next year for completion in three years

KUALA LUMPUR: Syarikat Prasarana Negara Bhd, the state-owned public transport operator, expects to start construction on the extension of its two light rail transit (LRT) lines in the Klang Valley early next year at a total estimated cost of RM7bil.

Expected to be completed in three years, the exercise will see the extension of the Kelana Jaya Line and Ampang Line by 17km and 17.7km respectively.

Group managing director Datuk Idrose Mohamed said the company had internally generated RM2bil and issued RM2bil Islamic bonds or sukuk to raise funds last week to part finance the project.

The RM2bil Islamic bond issuance was reported to be more than three times oversubscribed, with an order book of RM6.6bil.

Datuk Idrose Mohamed ... ‘The various contracts for the project will be awarded via open tender for companies that have been pre-qualified’

“Our initial intention was to issue a total of RM4bil of Islamic bonds. But now, the remaining RM2bil issuance will be next year or in the course of three years.

“This depends on our cashflow requirements and some of the payments will only be issued after the project is completed for defect liability.

“Our immediate need is RM2bil for land acquisition and some initial works,” he said after a media briefing on the public display of the proposed alignment for the LRT line extensions yesterday.

The three-month display starting tomorrow at the Department of Railways, Kuala Lumpur City Hall, Petaling Jaya City Council, Subang Jaya Municipal Council and Shah Alam City Council is to get public feedback on the project.

Going further The details of the proposed extension to the LRT lines have been made public and 26 new stations will be created as both lines meet in Putra Heights. – Graphic by Rosli Yacob / The Star

Alternatively, the public can view and channel feedback on the project via the Department of Railway website.

Idrose said Prasarana would publicise the pre-qualification of contractors to participate in the project in the newspapers next month.

“The various contracts for the project will be awarded via open tender for companies that have been pre-qualified and at the moment we have neither decided on the number of contractors nor contract packages.

“They will only be decided after we consider the response from the public as required by law and the final approval from the Government,” he said.

In line with the extension of LRT lines, Prasarana will also embark on fleet (train) expansion.

For Ampang LRT, the fleet expansion involves an additional 13 train sets of six cars per set while the Kelana Jaya LRT extension requires 35 more train sets of four cars per set.

Idrose said the funds for its the fleet expansion had been raised earlier.

Prasarana projected to double its current daily passenger volume with the lines extension.

Ampang LRT now has daily passenger volume of 170,000 while Kelana Jaya LRT has 180,000.

OSK Investment Bank analyst Jeremy Goh listed four construction companies with the potential of bagging the main contracts due to their experience in LRT.

“The first two are UEM Builders Bhd and IJM Corp Bhd as they have the experience as main contractors of the two existing LRT lines.

“IJM Corp wholly-owned subsidiary Road Builder (M) Holdings Bhd also has a bright chance to be involved as IJM Corp had sub-contracted many of the existing LRT works to Road Builder.

“Gamuda Bhd is also on the list due to its experience in the construction of Kaohsiung’s mass rapid transit in Taiwan.

“Malaysian Resources Corp Bhd also has high chances as it was the main contractor for the Kelana Jaya Line in the KL Sentral portion,” he said.

Goh said there would “definitely” be a lot of sub-contracts to build the stations or sound barriers that would benefit companies like Mudajaya Group Bhd.

He said funding should not be an issue as Prasarana was a state-owned company under Ministry of Finance Inc.

AmResearch in its sector report said this latest development validated its earlier stance that domestic contract flows were gaining momentum and reaffirmed its overweight position on the construction sector.

“Apart from LRT projects, tenders for the Bakun transmission cable project – estimated to cost RM10bil – could be out by the first quarter next year,” said the report.

Master Builders Association Malaysia president Ng Kee Leen said the RM7bil project was great news for the construction sector that had suffered from fewer projects awarded in the first half of this year.

“It is good for the sector to be involved in the improvement of our transportation system. And there should be more transportation projects for the betterment of our public transportation system.

“The third and fourth quarters should chart better industry growth than the first half year, and next year should be better as we are seeing more construction projects coming in.

“Among the big projects are the low-cost carrier terminal, dam projects such as in Terengganu and Penang as well as works in the Eastern Corridor Economic Region,” he said.

Related story:
Thousands to benefit from LRT extension

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