PUTRAJAYA: The Ministry of Finance announced today that MMC-Gamuda will continue the Mass Rail Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) project with a larger cost reduction for the underground works.
Its minister Lim Guan Eng said the decision was made after the final round negotiations which resulted in MMC-Gamuda agreeing to increase the cost reductions of the underground works to RM3.6 billion from RM2.13 billion.
Lim said MMC-Gamuda would continue to be the contractor for the underground works for a total cost of RM13.11 billion.
“With that, the total cost of construction (for both above ground and underground) will have been reduced by RM8.82 billion or 22.4 per cent, from RM39.35 billion to RM30.53 billion.
“The government is committed to getting value for money for all its government expenditures especially when the projects involve large amounts of debt.
“The final cost savings of RM8.82 billion or 22.4 per cent for MRT2 will reduce future fares that need to be paid by MRT users, thus increasing the use of public transportation in the Klang Valley,” said Lim in a statement to announce that the Mass Rail Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) project would be continued by MMC-Gamuda, after the company had agreed to the larger cost reduction for the underground works.
Lim said MMC-Gamuda had previously agreed to cut the cost of the above-ground works by RM5.22 billion, which was accepted by the ministry.
However, he said MMC-Gamuda’s early proposal to reduce cost by RM2.13 billion for the underground works was rejected, leading to the decision to terminate and re-tender the underground works contract.
“However, upon the prime minister’s request to hold final negotiations with MMC-Gamuda, the company has agreed with the ministry’s suggestion to further reduce the cost of the underground works from RM2.13 billion to RM3.6 billion.
“The ministry likes to extend our appreciation to Prime Minister Tun Dr Mahathir Mohamad for his attention
on this matter.
“This means that the construction cost (excluding interest during construction, land acquisition costs and other costs) of MRT2 has been successfully reduced by RM8.82 billion or 22.4 per cent from RM39.35 billion to RM30.53 billion,” he elaborated.
All above-ground stations, he added, would continue to be built as planned earlier while two underground stations – Bandar Malaysia (North) and Bandar Malaysia (South) - would be shelved, bringing the total number of stations from the original 35 to 33 now.
“The MRT project is a strategic government project which will increase the connectivity of the Klang Valley’s public rail network.
“And the MRT2 project will fulfill the needs of Klang Valley residents who are not yet connected to the rail network. It offers MRT services to a very highly populated corridor connecting Sungai Buloh to Serdang and Putrajaya,” Lim said.
As what had been announced on Oct 7, he said, the Cabinet had on Oct 3 approved the continuation of the above ground MRT2 works to be executed by MMC-Gamuda as a turnkey contractor with a cost of RM17.42 billion compared to the original cost of RM22.64 billion.
“This represents a savings of RM5.22 billion or 23 per cent. In the same announcement, the Cabinet had decided to terminate the RM16.71 billion underground contract and to retender the remaining works. This is due to the Government and MMC-Gamuda failing to come to an agreement on the cost for the underground portion.
“Subsequently after an appeal by MMC-Gamuda, the Cabinet had agreed to a renegotiation.
“A fresh round of talks was carried out on Oct 22 conducted by the finance minister personally where MMC-Gamuda agreed to a total reduction of RM3.6 billion or 21.5 per cent for the underground works.”