Sources say MRL would not have signed ECRL contract given a choice
Saturday, 30 Jun 2018
by daniel khoo
MALAYSIA Rail Link Sdn Bhd (MRL) would not have signed the East Coast Rail Link (ECRL) project contract if given a choice in the first place, according to sources.
A source says that MRL representatives revealed this to the Council of Eminent Persons (CEP), who noted that the contract was heavily skewed against Malaysia’s favour.
“Among the reasons was the 15% upfront payment. After information was revealed to the public of the unfavourable contract terms to Malaysia, even China government officials were quite embarrassed about it and agreed to changes in the agreement,” says a source.
It was reported earlier that the previous Barisan Nasional government signed for an entire project amount of RM66bil, and a 15% upfront fee amounted to around RM10bil.
“The project which was mooted by the previous BN government would have to be carried out by the new government because commitments have already been put into place. A cancellation would entail higher additional costs of more than RM21bil,” the source says. “So given this scenario, despite the new government having the right to cancel the ECRL project if it went against national interests they have decided to proceed,” he adds.
After the proposed cost cutting measures, costs for the ECRL project is expected to drop to RM40bil from the initial RM66bil.
The effect of the cost cutting would now see both Phase 2 and 3 of the ECRL project being cancelled, the sources say.
Phase 2 is the railway route from Gombak to Port Klang costing some RM9bil while Phase 3 is the double tracking portion & route to Pengkalan Kubor that costs RM11bil.
There are also proposals to only defer the Phase 2 of the project and to eventually award them to local contractors in an open tender. “But this is still being studied in-depth but the priority is to cut costs at this stage until the RM1 trillion debts come under control,” the source says. There are also other adjustments that will be made to the finer details of the project.
Among the proposed changes to the present ECRL project include to cut the total number of stations and to do away with the smaller ones.
“The aim of this is to really cut costs as there are grounds to believe that the mainland Chinese have over-designed it if the smaller details are observed,” a source says.
It is also understood that the number of tunnels will also be slashed from 50 to around 25.
“All these tunnels had exponentially added to costs and thus an alternate route without tunnels but surface railway will likely be chosen so that it will be more friendly to costs. While the design or even the total number of bridges will also be re-looked again,” he adds.
According to najibrazak.com, the ECRL had initially incorporated a total length of 100km in bridges with 50km of tunnel length that will cross the Titiwangsa Range.
MRL said earlier in the month that progress for the project is near 15% and they project team has already set up base and satellite camps in all eight sections of the project, land acquisition, site clearing and the construction of road access.
The company also said then that the construction had also included multiple road access of about 95km in length and temporary bridges spanning 1,067 metres that have been constructed at many of the ECRL project sites in the east coast states.
Other areas that will be reconsidered or re-looked include number of depots and the size of these depots.
The sources also said that the mainland Chinese have also offered to build a rail school for knowledge transfer purposes.
Changes will also be seen in the composition of local contractors participation so that it will be a more Malaysian project.
“Accordingly, the project managers also wanted to shed the image that this is purely a mainland China project that is being merely being deployed to Malaysia. I believe the Chinese contractors were in agreement and thus local content is expected to increase to at least 45% from 30% before,” the source says. The source said that the proposal was to allow for all civil, tracking and some systems works to be done by local contractors.
“The mainland Chinese have agreed in principle that this is acceptable since it is being built on Malaysian land. It will also give more stability to the ECRL project as it eliminates foreign exchange risks,” the source says
Read more at https://www.thestar.com.my/business/business-news/2018/06/30/sources-say-mrl-would-not-have-signed-ecrl-contract-given-a-choice/#7tmwKXDzwCHHWzwr.99
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