The Petaling Jaya Utara MP was referring to MRT Corp’s announcement earlier this week calling for bids for the third phase of the MRT project.
On Monday, The Edge reported that MRT Corp had invited local construction and infrastructure development firms to participate in the tender process to build, on a turnkey basis, and provide financing for the MRT3 line.
“The first question that needs to be asked is why the sudden switch to a turnkey model over the existing project delivery partner (PDP) model .
“The MRT1 and MRT2 projects were based on the PDP model and this saw the participation of local companies who were to ensure the on-time delivery of the project,” Pua said in a statement today.
He added that the announcement last week came as a big surprise to local infrastructure players and the investment community.
“This is because under the turnkey model, a single contract is awarded for the entirety of the project which is expected to cost about RM40 billion.
“This is a big surprise, because the government has previously praised the delivery of MRT for being done ahead of schedule and purportedly under budget,” Pua said.
The MRT Corp tender announcement 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 and expects it to be completed 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.
“On top of that, it requires the repayment period to be no less than 30 years,” Pua said.
The DAP national publicity secretary also cited MRT Corp chief executive officer Shahril Mokhtar who had said that the turnkey financing model is aimed at attracting foreign companies who may provide better financing options for MRT3.
“Shahril is reported to have said ‘if we utilise funds from say, DanaInfra… with an interest rate of about 5.1%… the borrowing cost will kill us… if foreign parties can give us 3%, then why not, its good for us’.
“Perhaps MRT Corp is trying to be disingenuous with their arguments. How come the financing cost of DanaInfra didn’t ‘kill’ the MRT1, MRT2 and LRT3 projects?” Pua asked.
He added that the actual project cost was more important because if the actual project cost is 20% higher, then a 2% lower financing cost will still cost MRT Corp more in the end.
“It is the same point we have raised for the East Coast Rail Link (ECRL) project.
“What is the point of awarding the RM55 billion contract directly to CCCC without any open tender merely for 1% lower in financing cost, when the government’s own consultants estimated the project to cost less than RM30 billion?”
Pua also suggested that the unprecedented stringent financing requirements as announced by MRT Corp seemed intentionally designed to disqualify locally experienced major infrastructure builders like Gamuda Bhd or MRCB.
“Unlike the MRT1 and MRT2 projects that saw the participation of Malaysians at all levels of the project, it now seems much less likely for local firms to participate in MRT3, unless they form consortiums or are hired as subcontractors by the turnkey developer.
“Why is the Government so intent on hiring foreign contractors when we already have all the expertise locally?”