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MRT3’s financing terms impossible for local firms, says Pua

 | November 19, 2017

DAP publicity secretary says no company in Malaysia can provide the high 90% financing for the project, which is estimated to cost at least RM35 billion.


PETALING JAYA: Petaling Jaya Utara MP Tony Pua has questioned the government’s new tender system for the Mass Rapid Transit 3 (MRT3) project, claiming that no Malaysian firm can provide the high level of financing that it demands.

The DAP publicity secretary said the tender requires bidders to provide financing for the project, which is forecasted to cost between RM35 billion and RM40 billion, of at least 90% with a repayment period of no less than 30 years.

“If the project costs RM50 billion, that means the tendering company or consortiums would need to provide at least RM45 billion in financing,” he said.

“There is no question (that) there are no companies in Malaysia who are able to provide that scale of financing despite having all the necessary qualities and technical skill-sets to complete the project,” he said in a statement today.

He said financing for MRT1 and 2 was undertaken by Mass Rapid Transit Corporation (MRT Corp) through DanaInfra, which freed bidders from having to provide their own financing options.

He also said the tender period of 45 days for MRT3 was “ridiculously short”.

“In fact, even the MRT alignment of the line has yet to be announced by MRT Corp,” he said.

“This raises a further question – is the entire MRT3 tender exercise skewed in favour of particular parties?” he added.

The MRT Corp tender announcement earlier this month followed Prime Minister Najib Razak’s Budget 2018 speech on Oct 27, where he said that the government, through MRT Corp, will expedite the construction of MRT3 or Circle Line with expected completion by 2025, earlier than the initial target in 2027.

According to the announcement by MRT Corp, the winning bidder for MRT3 was also to provide at least 90% financing with an eight-year moratorium whereby no repayments on the principal and interest of the financing will be paid to the government.

Pua also asked why MRT3 would be awarded as a turnkey contract rather than the project delivery partner (PDP) model used for MRT1 and MRT2.

He said this meant that the tender process for MRT3 consisted of appointing a main turnkey developer, as opposed to multiple tenders for different parts of MRT1 and MRT2 led by a PDP.

On Nov 14, MRT Corp CEO Shahril Mokhtar said the switch to a turnkey model could help save billions of ringgit.

He said this would enable MRT Corp to seek the best financing option as 80% of the works entailed boring and tunnelling works which would cost a lot of money.

“At the end of the day, if it is about project delivery and efficiency, and lowering boring costs, I think most of us would want to have this at the right cost,” he said.

The MRT3 bidding period, which began on Nov 15 with a tender briefing, ends on Dec 25, with the successful bidder to be known by mid-February next year.

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