Focus of new tenders in revised ECRL in south, says CIMB Research

KUALA LUMPUR: The main focus for tenders in the revised East Coast Rail Link (ECRL) would be the realignment from Mentakab into Negeri Sembilan and Selangor, CIMB Equities Research says.

It said on Tuesday the new southern alignment will provide a direct link from Kuantan Port to Port Klang. 

The research house pointed out the southern alignment aims to leverage on the existing KLIA Express Rail Link (ERL) and the upcoming MRT SSP Line’s (MRT2) interchange in Putrajaya Sentral, thus, underpinning passenger/ridership viability, which was in question previously.

CIMB Research said a positive surprise from the revised ECRL was the increased benefits to local contractors, in the form of a higher 40% of total civil works exposure, compared to 30% based on the original deal. 

“Working on the revised RM44bil construction cost, the potential share of works for local players amounts to RM17.6bil. Project completion is delayed from 2024 to 2026,” it said.

The roll-out of potential new tenders for local contractors as a result of the realignment will take some time, based on its checks, as this would hinge on the completion of the new railway scheme design, public display of the new alignment and finalisation of land acquisition, likely over the next six months. 

“The ECRL news is overall positive to mitigate the downturn of contracts. However, we retain our sector Underweight call given the average 43% run-up in share prices of rail contractors ahead of the ECRL’s revival. Upside risk is a stronger momentum of new ECRL tenders and the review of other deferred rail contracts from 2018,” it said.

The revised ECRL will have 20 stations – Kota Baru and Tok Bali in Kelantan, Kampung Raja, Kuala Terengganu, Pengkalan Berangan, Dungun, Kemasik and Chukai in Terengganu while in Pahang, the train will make stops in Cherating, Kuantan Port City, Kuantan Port City 2, Kota SAS, Gambang, Maran and Mentakab.

Aside from Putrajaya, the ECRL will also have stations in Jelebu in Negri Sembilan, Bangi/Kajang and Port Klang and another proposed station in Selangor.

The travelling time from Kota Baru to the Klang Valley is expected to be about four hours, which is significantly shorter compared to the average seven hours by road.

The project, which now costs RM44bil after renegotiation, would have a new targeted completion date of Dec 31, 2026. This is an extension of two and a half years from the original completion date of June 20, 2024.

The construction cost managed to be brought down by RM22bil, which is almost a third of the original cost of RM66bil.

On April 12, Malaysia Rail Link Sdn Bhd and China Communications Construction Company Ltd signed a supplementary agreement to pave the way for the resumption of the suspended project.