Contractors could secure up to RM11bil in ECRL


PETALING JAYA: Local contractors could secure between RM8.8bil and RM11bil in civil work contracts from the RM44bil East Coast Rail Link (ECRL), which is set to be relaunched at the end of the month.

CGS-CIMB Research also expects that tenders for the project could be announced by the end of the third quarter, with initial awards dished out in the following quarter, at the earliest.

As civil works typically make up 50% to 60% of total projects costs, the research house estimated that the total value of civil works for the ECRL would be between RM22bil and RM26bil.

Using this value range to estimate the 40% portion reserved for local contractors, the research house arrived at a total addressable tender value of between RM8.8bil and RM11bil.

Civil works are the jobs that exclude system works, land acquisition, rolling stock, and signalling or electrification, among others.

The balance RM13bil to 16bil of civil works, it noted, would be directly undertaken by the project’s turnkey contractor, China Communications Construction Co Ltd (CCCC).

CCCC’s job scope will include most of the tunnelling works, including the new 7km hill tunnel near Jelebu that will replace the originally planned 18km-long Genting tunnel.

“We understand that the overall civil works is divided into three revised sections, two of which require realignment and approvals for the new railway scheme by the first quarter of 2020, while one section can begin implementation immediately in the second half of 2019,” it said in a note.

In the second half of this year, CGS-CIMB Research expects local contractors to focus on the tenders for section B (223km, Dungun-Mentakab) of the revived mega project, which it estimated to be worth between RM3bil and RM4bil based on the 40% share of civil works available to be tendered by listed and unlisted local contractors.

“While the tender rounds are likely to be fairly competitive, we believe selected rail players with track records will emerge as potential contenders,” it said.

The ECRL is scheduled to be relaunched on July 25 following the signing of the supplementary agreement (SA) between Malaysia Rail Link (MRL) and CCCC in April this year.

The project had earlier been axed by the Pakatan Harapan government due to the high costs involved.

The planned relaunch follows the pre-qualification round held at the end of May, which attracted 1,321 submissions across all levels of contractors.

“Contrary to previous expectations that the long-awaited ECRL tenders will be accelerated in the second half of 2019, the reality is that additional time is needed for the approval of the new railway scheme which would incorporate changes in scope and design, based on the SA signed.

“Due to these reasons, the roll-out of tenders will, therefore, be in stages and the commencement of construction work will depend on the timing of land acquisition and site possession,” the research house said.

CGS-CIMB also singled out IJM Corp, WCT Holdings, Sunway (via Sunway Construction) and Muhibbah Engineering as potential beneficiaries of Section B of the project, or the incoming tenders of other sections next year.

It has maintained its “neutral” stance on the sector, pending further details on the project’s rollout plans.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Next In Business News

PBOC says China must prevent fiscal deficit monetisation
LBS Group reports stronger sequential performance in 3Q
Ringgit ends easier against US dollar at 4.0730
Super normal profit for Comfort Gloves as 3Q earnings surge over 1,000%
Eversendai posts 3Q net loss of RM35.8m
Mah Sing Group on track to achieve RM1.1b target
Trump to add China's SMIC and CNOOC to defence blacklist
KLCI slumps over 40 points in regional sell-off
Hong Kong stocks drop, but post best month in nearly 2 years
Dollar hits two and a half year low even as equity rally stalls

Stories You'll Enjoy