PETALING JAYA: Prasarana Malaysia Bhd initially received the Cabinet’s approval in 2015 to issue Government Guaranteed bonds of RM10bil for the LRT3 construction, according to the public transport service operator.
It said in a statement yesterday 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.
It was awaiting instructions from the Finance Ministry on the “rigorous and comprehensive cost rationalisation” to be approved.
According to the operator, Finance Minister Lim Guan Eng announced that the Cabinet had approved the reduced project cost to be RM16.6bil, a 47% reduction or savings of RM15bil from the cost of RM31.65bil.
It added that it would abide by the ministry’s instructions.
Prasarana said SPAD had also fully supported the decision of the ministry to rationalise the cost of the LRT3 project.
“In view of the financial constraints faced by the Government, Prasarana supports the decision to remove stations with projected lower ridership from the alignment to further reduce cost,” it said.