Putrajaya sets condition before giving go-ahead for ECRL

Negotiations on the cost of the ECRL project will be held with contractors and other relevant parties. (Bernama pic)

PETALING JAYA: The government says it can only decide whether to continue with the East Coast Rail Link (ECRL) project started by the Najib Razak administration after renegotiating the total price tag with its Chinese contractor.

Saying the cost of the 690km-long rail link that stretches from Selangor to Kelantan had ballooned to over RM80 billion, Finance Minister Lim Guan Eng added that the project would be financially and economically sustainable if its contractor, China Communications Construction Company, agreed to a “significant” reduction of the amount.

“Negotiations about the costs will be done with the contractors and other parties involved in the project,” he said in a statement today.

The ECRL project came under fierce criticism during the election campaign for the size of Chinese involvement in Malaysian infrastructure projects.

Following Pakatan Harapan’s victory in the May 9 polls, Prime Minister Dr Mahathir Mohamad made it a priority to cut the national debt and pledged to review major projects approved by the previous government.

The ECRL project, which is being built by CCCC, is mainly financed by a loan from China Exim Bank.

To date, Lim said, the government had paid CCCC RM19.68 billion through its wholly-owned operating subsidiary Malaysia Rail Link Sdn Bhd (MRL).

This comprised an advance payment of approximately RM10.02 billion and progress payment of RM9.67 billion.

“The advance payment of RM10.02 billion, however, is backed by an advance payment bond of the equivalent amount. This advance payment bond may be redeemed by MRL to recover up to RM10.02 billion.

“In other words, in the event of a worst case scenario, the federal government can recover RM10.02 billion of the RM19.68 billion paid,” he said.

He also noted the Selangor government’s objection to the project, especially the rail link from ITT Gombak to Port Klang.

“The Selangor state government’s objection is principally based on Selangor’s application to establish the 16km-long Klang Gates Quartz Ridge, which is the longest of its kind in the world, as a Unesco World Heritage Site.”

Adding that completing the Gombak-Port Klang link would “guarantee the failure of Selangor’s application”, Lim said the federal government would enter into discussions with the Selangor government after a “significant price reduction” on the ECRL was obtained.