PETALING JAYA: Prasarana Malaysia Berhad initially received the Cabinet's approval in 2015 to issue Government Guaranteed bonds of RM10bil for the LRT3 construction, said the public transport service operator on Saturday (July 14).
It said in a statement on Saturday (July 14) that the RM10bil Government Guarantee which was approved on March 30, 2015 only took into account the cost for work package contracts and supply of feeder buses (RM9bil), as well as land acquisition (RM1bil).
"Prasarana was fully aware that the initial cost of LRT3 (RM10bil) was inadequate, and a substantial increase would be needed for the project to be completed," the operator added.
The initial Government Guarantee excluded Government Service Tax (GST) (now no longer required); Fee for the Project Delivery Partner (PDP); PDP Reimbursable Cost; Contingencies; Owner's Cost including contributions to utilities companies, staff cost, etc.; Owner's Consultancy Services e.g. Independent Checking Engineer reporting to the Land Public Transport Commission (SPAD); Preliminary and General Costs; Land Rental; Cost Claim; and Interest during Construction.
On March 30, 2018, Prasarana formally requested approval to issue an additional RM22bil Government Guaranteed bonds with the expectation that the final total cost of LRT3 would increase to RM31.65bil.
It currently awaits instructions from the Finance Ministry on the "rigorous and comprehensive cost rationalization" to be approved.
According to the operator, Finance Minister Lim Guan Eng had announced that Cabinet had approved the reduced project cost to be RM16.6bil, a 47% reduction or savings of RM15bil billion from the cost of RM31.65bil.
It added that it would abide by the Finance Ministry's instructions.
The statement shared that SPAD had also fully supported the decision of the Finance Ministry to rationalise the cost of the LRT3 project.
"In view of the financial constraints faced by the Government, Prasarana supported the decision to remove stations with projected lower ridership from the alignment to further reduce cost.
"SPAD has also fully sanctioned the proposed reductions in stations, which would not be expected to see a high passenger load. Nevertheless, provisions have been made for new stations to be built, or existing stations to be upgraded when demand increases in the future," it added.