MRT2 – Govt cancels contract for underground portion, to call international tender
PETALING JAYA: The federal government will be calling for an international open tender for all unfinished underground work of the Mass Rapid Transit 2 (MRT2) project, after negotiations with existing turnkey contractor MMC-Gamuda Joint Venture to bring down total construction costs saw them agreeing on the above-ground portion but not underground segment.
“As a result, the Cabinet has decided to terminate the underground contract. All unfinished underground work will be retendered out through an international open tender process. This decision was made after considering that the federal government can achieve further significant savings by retendering the underground work package compared to the offer made by the existing contractor,” Finance Minister Lim Guan Eng said in a statement today.
Costs for the underground portion stood at RM16.71 billion.
Negotiations with MMC-Gamuda JV for the above-ground works, however, were successful, with the project delivery partner (PDP) committing to completing the portion at a cost of RM17.42 billion, versus the original cost of RM22.64 billion, translating into savings of RM5.22 billion.
The savings are achieved through a reduction in cost and rationalisation in work scope without cancelling any of the above-ground stations.
The Ministry of Finance with cooperation from the Attorney-General’s Chamber, the Ministry of Transport, agencies such as Mass Rapid Transit Corporation Sdn Bhd (MRTCo) and the private sector, embarked on a cost-rationalisation exercise on MRT2 in May 2018. An engineering consultancy firm was engaged to conduct the cost rationalisation.
Lim said the expected cost reduction for MRT2 will cut the fares rail passengers will have to pay, and boost public transport usage in the Klang Valley.
MRT2, also known as the Sungai Buloh-Serdang-Putrajaya Line, was approved by the Cabinet on Feb 26, 2014 with initial estimated cost of RM28 billion. This figure did not include consultant fees, PDP fees, interest cost and overhead costs for MRTCo.
However, the cost of MRT2 ballooned to RM56.93 billion due to the approval for a railway scheme that had a new line extended to Bandar Malaysia, a change in scope, depreciation of the ringgit and other factors. The overall cost comprised RM39.35 billion for construction, RM6.18 billion land acquisition, RM360 million for feeder buses and depots, RM1.2 billion others, as well as RM9.84 billion worth of interest expenses during construction.
