New LRT3 contract to be signed soon

Work on the LRT3 project continues along Persiaran Tengku Ampuan Rahimah in Klang in the midst of daily traffic congestion in the royal town.

PETALING JAYA: The new contract for the light rail transit 3 (LRT3) project is expected to be sealed before Chinese New Year.

According to the project’s main contractor, MRCB-George Kent Sdn Bhd (MRCBGK), unpaid contractors are also slated to receive their outstanding payments by the month’s end.

In an e-mail reply, LRT3 project director Patrick Hwang Chee Leong said MRCBGK and the work package contractors (WPC) had a discussion with Prasarana Malaysia Bhd this month on the payments owed to them.

“We were informed by Prasarana that our WPCs would be getting paid this month,” he said.

The funds should help ease outstanding payments to the contractors, he added.

Prasarana, which is the project owner of LRT3, has not paid the sub-contractors for work done since February last year.

The cumulative amount owed is believed to be over RM1bil if claims up to December last year are taken into account, sources said.

As to when the new contract between Prasarana and MRCBGK will be signed, Hwang said he is “hoping to finalise and sign a new agreement by the end of this month”.

The agreement, to be restructured from a project-delivery-partner (PDP) model to a “fixed-price contract”, was supposed to be executed by Dec 12, 2018, based on a Bursa Malaysia filing.

Hwang explained that the signing was extended to this month since December was a festive season and many employees were not available.

Work on LRT3, which runs from Bandar Utama to Klang, slowed down in October last year, pending the signing of a new contract following a review of the project by the Pakatan Harapan government.

Sources said MRCBGK and the WPCs had collectively wrote to Prasarana last week to raise their concerns on the arrears of payment due.

The impasse has bogged down players in the industry, especially the smaller ones, some of whom are said to be on the verge of folding up.

It is understood that the certified payments outstanding to WPCs amounted to about RM800mil up to September 2018.

Sources said there is approximately another RM300mil of uncertified payment claims for the three-month period of October to December last year.

This brings the total amount owed to contractors to about RM1.1bil. However, it is uncertain whether Prasarana will pay out this total amount.

Moving forward, industry players reckon that it would take another two to three months before work on the 37km LRT3 resumes.

“Once a new contract is inked, the sub-contractors will then go to the banks for financing. For now, the credit lines have stopped,” said an industry source.

Prasarana, when contacted, said it was not able to provide updates at this point.

“We will, however, share with you details on the LRT3 project at the end of the month,” a spokesperson for the government agency said.

In July last year, the government approved the continuation of the 36km-long track at a final cost that was reduced by 47% to RM16.63bil. The government said it would do away with the PDP model and revert to the turnkey model, while the completion date was extended from 2020 to 2024.

Besides the joint venture of MRCB and George Kent as the main contractor, other listed companies that were involved in the project include Mudajaya Group Bhd, WCT Holdings Bhd, IJM Corp Bhd and Sunway Construction Group Bhd.

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