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Malaysia says ECRL costs S$27.44 bil, must be cheaper to be viable

KUALA LUMPUR ― Malaysia's Finance Ministry on Tuesday (July 3) revealed the final cost of the the East Coast Rail Link (ECRL) project to be possibly RM81 billion (S$27.44 billion), saying this must be reduced significantly to make it financially viable.

An artist’s impression of the East Coast Rail Link (ECRL) station in Wakaf Baru, Kelantan. Malaysia's Finance Ministry reveals the final cost of the rail project to be possibly S$27.44 billion, saying this must be reduced significantly to make it financially viable.

An artist’s impression of the East Coast Rail Link (ECRL) station in Wakaf Baru, Kelantan. Malaysia's Finance Ministry reveals the final cost of the rail project to be possibly S$27.44 billion, saying this must be reduced significantly to make it financially viable.

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KUALA LUMPUR ― Malaysia's Finance Ministry on Tuesday (July 3) revealed the final cost of the the East Coast Rail Link (ECRL) project to be possibly RM81 billion (S$27.44 billion), saying this must be reduced significantly to make it financially viable.

Finance Minister Lim Guan Eng said the RM81 billion project cost does not include any additional operations costs, which could not be accurately determined now.

“The basic cost of the construction of the 688.3km rail line amounts to RM66.78 billion with its original project scope to build a rail line from the Integrated Transport Terminal (ITT) constructions from Gombak-Wakaf Baru (RM46 billion).

“However on May 13 last year, the previous administration signed an additional agreement to extend the line from ITT Gombak to Port Klang for RM9 billion,” he said in a statement.

He said the Barisan Nasional (BN) Cabinet also approved the northern extension of the project from Wakaf Bharu to Pengkalan Kubor in Kelantan for another RM1.28 billion and the upgrading of the ECRL to a double-tracking project for an additional RM10.5 billion in August 2017.

Mr Lim said the RM80.92 billion took into the account land acquisition costs (RM2.5 billion), working capital (RM50 million), other operating costs (RM500 million), interest (RM7.444 billion), Sukuk bond coupon (RM3.192 billion), commitment fee (RM238 million) and management fee (RM216 million).

“Based on the above facts and figures, as well as the feasibility studies of the project, we expect that the ECRL project will only become financially and economically feasible if there is a drastic price reduction of the project by China Communication Construction Company (CCCC).

“To date the Government of Malaysia via its wholly-owned operating subsidiary, Malaysia Rail Link Sdn Bhd has paid CCCC the sum of RM19.68 billion comprised of RM10.02 billion in advance payment and RM9.67 billion in progress payment,” he said.

However, Mr Lim added the government was able to recover the RM10.02 billion payment.

Mr Lim also said the Selangor state government objected strongly to the completion of Gombak-Port Klang portion of the rail line because this would doom the state’s application to establish the 16km Klang Gates Quartz Ridge, which is the longest of its kind in the world, as a Unesco World Heritage Site.

“Only after a significant price reduction on the ECRL is obtained, will the Federal Government enter into discussions with the Selangor state government on the merits of the ECRL project as compared to the possible Unesco World Heritage Site listing,” he said.

In just his first few weeks back in office after the May 9 general election, Malaysian Prime Minister Tun Dr Mahathir Mohamad has pledged to review big-ticket infrastructure projects inked by his predecessor Datuk Seri Najib Razak.

This includes a planned high speed rail project between Kuala Lumpur and Singapore, and ECRL.

Dr Mahathir has reportedly said he found the contract for the ECRL project — whose contractor is state-owned China Communications Construction Co Ltd — strange because money from the RM55 billion loan given out by the Export and Import Bank of China was kept abroad and paid to the Chinese construction company in China, as opposed to drawing down the loan in Malaysia and paying it to the foreign company’s local subsidiary.

However, Mr Najib has accused Dr Mahathir of punishing Opposition states Pahang, Kelantan, and Terengganu by halting the ECRL, as the latter would have benefited from the project. MALAY MAIL

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