LRT3 likely to resume with reduced budget and revised plan

Agreement on cost: A source says that contractors of the LRT3 project have agreed to the new revised cost

Agreement on cost: A source says that contractors of the LRT3 project have agreed to the new revised cost

KUALA LUMPUR: The light rail transit 3 (LRT3) project, which risked being shelved as a result of its cost rising by more than three times, is expected to resume in November with a reduced budget and revised plans, sources say.

The cost of the LRT3 project was initially tagged at RM10bil. It was subsequently revealed that the initial costs were somewhat misguided as certain costs were not taken into consideration, and on summing up the total costs, the figure had ballooned to RM31.65bil.

Sources also said that there will be no change in the project delivery partner (PDP) which cements the joint venture between Malaysian Resources Corp Bhd and George Kent Bhd (MRCB-GK).

“George Kent will continue to be part of the PDP. There is no change,” said a source.

There were earlier speculation that engineering company George Kent would withdraw from the PDP partnership.

Sources said MRCB told contractors to scale down their cost and return with lower estimates.

The Finance Ministry (MoF) had told stakeholders to scale the cost down from RM31.65bil to RM16.63bil a few months ago.

“Contractors have agreed to the new revised cost,” a source said.

Work pertaining to LRT3 has slowed down the last couple of months because the revised design and contracts were not signed by Prasarana, contractors and the two project delivery partners.

Sources said the revised design and contracts are expected to be firmed up before the end of October with work to continue at full steam by November.

Like other construction projects entered into by the previous administration, the viability of the LRT3 became a question mark a few months ago when the MoF revealed that the projected total cost of the line had ballooned to RM31.65bil.

Finance Minister Lim Guan Eng had, in July, noted that project owner Prasarana Malaysia Bhd had in 2015, secured a government guarantee for a RM10bil bond facility to fund LRT3.

However, on March 30, 2018, about a month before the May 9, 2018 election upset, the state-owned transportation company asked for an additional RM22bil worth of government guarantee for the construction and completion of the project.

While the Cabinet had at a July 11 meeting approved the continuation of the LRT3 project, it asked for the cost to be reduced by 47% from RM31.65bil to RM16.63bil, a savings of RM15.02bil.

The RM16.63bil figure is to include all project costs, including but not limited to work package contracts, land acquisition, project management, consultancy fees, operational and overhead costs and interest during construction.

Among the key steps suggested by MoF in July to reduce and rationalise the LRT3 project are:

> Reducing the order of 42 sets of six-car trains to 22 sets of three-car trains. A feasibility study of LRT3 suggested that 22 sets of three-car trains are sufficient to cope with the passenger demand until the year 2035;

> Reducing size of LRT train depot due to significantly reduced number of LRT trains to be acquired;

> Streamlining the size and design of LRT stations based on Kelana Jaya LRT line standards instead of benchmarking them against the larger MRT stations;

> Shelving the construction of five stations with low projected passenger ridership, namely Lien Hoe, Temasya, Sirim, Bukit Raja and Bandar Botanic;

> Cancelling a 2km tunnel and an underground station at Persiaran Hishamuddin, Shah Alam; and

> Extending the timeline to complete LRT3 from 2020 to 2024 to reduce construction cost which was inflated due to “acceleration costs”.

The 37km line is a critical project meant to alleviate the issue of traffic congestion along one of the most important and densely populated development corridors in the Klang Valley, from Johan Setia in Klang to Bandar Utama, Petaling Jaya. The LRT3 project is expected to serve a population of 2 million with the capacity to transport 36,700 passengers per hour each way.

With the resumption of the LRT3 project, this means only three large government construction/rail projects are ongoing, namely LRT3, mass rapid transit 2 or MRT2 from Sg Buloh-Serdang-Putrajaya and the Pan-Borneo Highway in Sabah and Sarawak.

The deferred projects include MRT3, which is estimated to cost up to RM40bil, the RM81bil East Coast Rail Link (ECRL) to link Port Klang and Kota Baru and the High Speed Rail from Kuala Lumpur to Singapore, estimated at RM110bil.

Corporate News , Construction , rail