The renegotiation of the ECRL project resulted in a win-win situation that mutually benefited Malaysia and China, it said in a statement on Tuesday to clarify an online report.
“This include an impressive reduction of RM21.5bil or 33% of the project’s cost to RM44bil, the establishment of a 50:50 joint-venture company between MRL and China Communications Construction Company Ltd (CCCC) for the operation and maintenance of the ECRL, and increased in local participation of Malaysian contractors in the project’s civil works,” it said.
To recap, MRL said the government had earlier faced with a choice of either renegotiating the November 2016 engineering, procurement, construction, and commissioning (EPCC) agreement, or to pay a hefty termination cost amounting to RM21.78bil.
As the government's main concern was always the high cost of the ECRL, it was then decided for renegotiation of EPCC Agreement with CCCC and China for a more equitable deal and with the rakyat in mind.
“Reiterating what Prime Minister Tun Dr. Mahathir Mohamad announced on April 15, 2019, the government of Malaysia had to work within the constraints of the existing EPCC sgreement for the ECRL that was inked between MRL and CCCC back in November 2016.
MRL said neither the government nor MRL have claimed that the savings of RM21.5bil for the improved ECRL project was purely from the element of “overpricing” as suggested by an online report.
It also pointed out this was not the basis of the negotiations with China at all.
“MRL would like to stress that Malaysia entered into negotiations with the PRC on a cooperative basis to finds ways and means to reduce the cost of the ECRL without losing the essence of the rail network.
“For the record, both countries chose to enter the negotiations in a spirit of diplomatic goodwill, with the aim of achieving the construction of the ECRL at a lower cost,” it said.
MRL said with regards to a new feasibility study and environmental impact assessment (EIA) report that was mentioned in the opinion piece, MRL would like to highlight that renegotiations were conducted on the premise that the original EPCC agreement was still in place.
In short, it was not a negotiating process to reach a new EPCC Agreement but to facilitate the resumption of the ECRL via the Supplementary Agreement (SA) that was inked on 12 April 2019 in Beijing.
Moreover, MRL takes cognisance of the fact that as a legal document, the original EPCC agreement could not simply be cast aside.
“This itself negated the need for a new feasibility study since we were working on the premise to avoid paying termination fee at a staggering RM21.78bil,” it said.
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