PETALING JAYA: The MMC-Gamuda joint venture (JV) is holding out for an amicable settlement with the government in regard to the mass rapid transit phase two (MRT2) project.
It said in a statement that the underground portion of the project was 40% completed and it had already offered a RM2.3bil reduction in the price of the underground works that was awarded to the JV at a cost of RM15.47bil in 2016.
“The balance of the uncompleted underground work is valued at RM9.6bil. MMC-Gamuda has offered a reduction of RM2.3bil, which represents 24% of this value.
“Even though the Finance Ministry (MoF) has made known that the offered reduction of RM2.3bil is still not adequate, to date, it has not been conveyed to MMC-Gamuda an acceptable target figure that the MoF has in mind. If the target figure is made known together with the components of the savings as individual items, both parties would be placed in a better position to re-examine these components from where savings could be derived and narrow the differences,” MMC-Gamuda said in the statement.
MMC-Gamuda was given the mandate to see the completion of the MRT2 as the project delivery partner (PDP) in February 2014 at an initial cost of RM28bil.
After the change in government in May this year, the project came under review.
However, the MoF disclosed on Sunday that the cost had almost doubled to RM56.93bil due to various factors such as changes in the rail alignment and the depreciation of the ringgit to the US dollar.
The ministry also said that the contract for the underground works in MRT2 awarded to MMC-Gamuda had been terminated.
However, it (the ministry) has accepted the JV’s offer to undertake the above-ground works for RM17.42bil and as a turnkey contractor instead.
The MoF said it had been guided by a consulting firm in arriving at a decision to terminate the underground contract and call for an international tender to reduce the cost.
MMC-Gamuda said that it had not been notified of the termination and changes in the terms of the contract.
The JV also said that it had been engaged in discussions and negotiations with the MoF over the past two months to review the scope of works and specifications of the project with the aim of reaching a compromise on cost reduction.
“In respect of the underground works, MMC-Gamuda has so far offered a 24% reduction for the balance of the underground works,” it said.
In order to bridge the gap on the pricing, MMC-Gamuda had on three occasions in the last two months urged the MoF to appoint an international engineering consulting firm with the relevant experience to carry out an objective review looking into all reasonable engineering and technical requirements.
“The appointment of an international engineering consulting firm as proposed by MMC-Gamuda would greatly facilitate this exercise,” it added.
The companies said that the underground works was awarded to them in 2016 after an international competitive tender that, due to the challenging ground conditions, had stringent pre-qualification requirements with only five contractors being pre-qualified by MRT Corp Sdn Bhd to tender.
Of the five, MMC-Gamuda was the only local contractor, it said.
The bids were evaluated by the reference design consultant, Arup Singapore Pte Ltd, which was appointed by MRT Corp.
MMC-Gamuda said its bid scored the highest technical score and offered the lowest price.
The JV Co also listed several other reasons why the termination may not be the best solution.
Among them are:
> During the initial tender process, MMC-Gamuda had submitted a proposal with a lower cost without compromising the safety, performance and functionality of the operational railway. It said that however, MRT Corp opted not to accept the alternative offered by MMC-Gamuda. The reductions currently on offer to the MoF include some of these alternatives, but only those applicable to the balance of the underground works.
> There is a high risk of sinkholes due to tunneling through the city centre. MMC-Gamuda’s continued in-house developments and customisation of the tunnel boring machines is an integral part of managing this risk against sinkholes that proved successful in MRT Line 1.
> All 19 sites are active with 40% of the works completed. Two of the tunnel boring machines are already in operations with the balance being assembled and ready to mine from next month onwards.
> Job losses, of which MMC-Gamuda claimed some 20,000 personnel are involved in the underground works portion.