Mega stop, go, maybe

  • Nation
  • Friday, 17 Aug 2018

Pakatan Harapan announced that it would review a number of mega projects initiated by the previous administration to save the country billions of ringgit. Since then, some multi-billion ringgit projects have been permanently shelved, others suspended or placed under review, while some were given the green light to carry on. 

Kuala Lumpur-Singapore high-speed rail (HSR)

The Kuala Lumpur-Singapore high-speed rail (HSR) project was among the first mega project to be reviewed by the new Pakatan Harapan government after it came into power, with Prime Minister Tun Dr Mahathir Mohamad saying that the project was not beneficial and would cost a huge sum of money.

The project, involving a 350km railway scheme linking Kuala Lumpur and Singapore, was expected to start operations in 2026. It would have cut travelling time between Kuala Lumpur and Singapore to 90 minutes.

Eight stations were planned for the line: Bandar Malaysia, Sepang-Putrajaya, Seremban, Melaka, Muar, Batu Pahat and Iskandar Puteri stations in Malaysia and the Jurong East station in Singapore.

Interestingly, two days before the Dewan Rakyat was dissolved in April to pave way for the 14th general election, MyHSR Corp Sdn Bhd – the firm responsible for the development and implementation of the project – announced the appointment of two project delivery partners (PDPs) for the project to oversee the civil works worth a combined RM30bil-RM40bil.

The contracts were secured by the joint ventures (JVs) of Malaysian Resources Corp Bhd and Gamuda Bhd (MRCB-Gamuda JV) and YTL Corp’s Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd and TH Properties Sdn Bhd (YTL-THP JV), a subsidiary of pilgrim fund Lembaga Tabung Haji.

The HSR project, which was initially estimated to cost a maximum of RM72bil, had eventually escalated to RM110bil, according to Finance Minister Lim Guan Eng.

Mass Rapid Transit line 3 (MRT 3)

The Klang Valley mass rapid transit line 3 (MRT 3 or Circle Line) project, reportedly costing between RM40bil and RM45bil, was also scrapped, given its cost.

If completed, the line would have formed the loop line of the Klang Valley integrated transit system - which consists of two commuter rail lines, five rapid transit lines, one bus rapid transit line and two airport rail link to Kuala Lumpur International Airport and another one to Subang Airport.

According to reports, the cancellation of the HSR and MRT 3 projects would carve out at least RM100bil worth of government spending from the economy.

East Coast Rail Link (ECRL)

The East Coast Rail Link (ECRL) project, which spans from Port Klang to Gombak and onwards to Kuantan and Pengkalan Kubor, has been suspended due to its escalating price tag.

The project started off with an initial estimate of less than RM30bil in 2007. When the previous government signed the agreement with China Communications Construction Company Ltd (CCCC), the project’s main contractor, in 2016, it was for only Phase 1 – from Gombak to Wakaf Baru in Kelantan – tagged at RM46bil.

The cost of Phase 2, from Gombak to Port Klang, was another RM9bil.

On May 13, 2017, the previous government signed an additional agreement with CCCC to carry out Phase 2 of the project.

Subsequently, the Cabinet approved the northern extension of the project from Wakaf Baru to Pengkalan Kubor in Kelantan for the value of RM1.28bil. On Aug 23, 2017, the Cabinet further permitted the upgrading of the ECRL to a double-tracking project, costing an additional RM10.5bil.

According to these figures, the basic cost of the project amounts to about RM66.78bil. However, it does not include the land acquisition cost, interest, fees and operating costs - bringing the final amount of the ECRL to a staggering RM81bil.

The Finance Ministry announced the project was suspended on July 3, adding that the 688-km rail project would only be continued once the cost has been lowered to a financially-viable level.

Light Rail Transit 3 (LRT 3) 

The 37km light rail transit 3 (LRT 3) project from Bandar Utama in Petaling Jaya to Johan Setia in Klang was first announced under the federal government’s budget in 2016.

Prasarana Malaysia Bhd, the project owner, would appoint Malaysian Resources Corp Bhd and George Kent (M) Bhd (GKent) as the PDPs for the project at an approved construction budget of RM9bil.

In March this year, after almost 40% of the work had been carried out, Prasarana estimated the cost to be RM31.6bil due to changes from upscale to the design.

To complete the project, it had sought an additional RM22bil from the government before the May 9 general election.

The previous government did not approve of the RM22bil, while the new government has promised to keep a tight rein on the LRT 3 project, stating that the price cannot exceed RM16.63bil.

Tun Razak Exchange (TRX)

One mega project that was spared the axe, despite being linked with a multi-billion ringgit scandal, was the Tun Razak Exchange (TRX) development.

Scrapping it would have meant paying RM3.51bil in compensation claims, as well as having to deal with the eyesore of an abandoned mega-project in the heart of Kuala Lumpur.

TRX’s total land value is worth about RM7.6bil, while the development cost is estimated to be around RM6bil.

Located on 70 acres of prime land, 1Malaysia Development Bhd (1MDB) acquired the TRX land from the Federal Government for RM302.38mil in 2010.

In March 2013, Abu Dhabi Malaysia Investment Co Ltd (a 50%-50% joint venture between 1MDB and Aabar Investments PJS) became the first major multinational anchor investor in TRX.

A month later, US$3bil was raised overseas for the TRX development. However, no money was channelled to the development. Last year, master developer TRX City Sdn Bhd (TRXC), then a subsidiary of 1MDB, was transferred to the Finance Ministry because 1MDB was unable to service its debts.

To date, the Malaysian government has injected RM3.69bil into TRXC.

After reviewing the project, the Pakatan Harapan government has decided to see through the completion of the RM40bil TRX development.

To date, seven plots of land on TRX totalling RM2.88bil have been sold to Lendlease, Tabung Haji, Mulia Group, Affin Bank, WCT, IJM Corp and HSBC.

Mulia’s Exchange 106 and the IJM’s Prudential building expected to be ready by next year.

Pan-Borneo Highway

The RM29bil, Pan-Borneo Highway that will link Sabah and Sarawak, has also set tongues wagging due to its high price-tag. However, to date, no final decision has been made on whether to review the multi-billion ringgit highway project.

Phase 1 of the highway links Telok Melano in southern Sarawak to Miri in the north, and is slated for completion in 2021. Phase 2, which covers 77km to link Sabah, is at the planning stage.

Maltimur Resources Sdn Bhd, a company linked to the influential Tan Sri Bustari Yusoff of Sarawak, and Jalinan Rejang Sdn Bhd were the PDPs for the Pan-Borneo Highway.

Despite the change in government, the project will still carry on - but an audit will be carried out on the contractors.

First announced as part of Barisan Nasional’s manifesto during the 13th General Election in 2013, construction works on the 2,325km, toll-free highway was officially launched by Prime Minister Datuk Seri Najib Tun Razak for the Sarawak portion in Bintulu in March 2015.

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