We needed to cut costs on MRT 2, says Guan Eng

KUALA LUMPUR: Finance Minister Lim Guan Eng gave the assurance today that the MRT 2 project would continue, adding however that Putrajaya was committed to lowering the costs to improve government liability.

“We have every intention of continuing with these projects,” he said, referring to the MRT 2 and LRT 3.

“But we are committed to ensuring that the scope is not unnecessary or excessive, and that the cost is reasonable.”

Speaking at an investor conference titled “Malaysia: A New Dawn”, Lim reiterated his announcement on Sunday that the government had successfully renegotiated a 23% reduction in the total cost of the above-ground contracts for the MRT 2. He said this was equivalent to savings of RM5.2 billion.

“When we could not agree on an appropriate cost reduction for the MRT 2 underground works portion after receiving the necessary feedback from independent consulting engineers, we had little choice but to conduct an international open tender for the balance of the work for the underground portion,” he said.

He said this was intended to cut costs and attain more savings once the international tender for the underground work is completed.

The lower cost of construction would improve liability and future debt for the government, translating to lower ticket prices and higher passenger traffic, he added.

The MMC-Gamuda consortium had said the termination of its contract to build the underground portion of the MRT 2 project would result in immediate job losses to over 20,000 people involved in the project from a supply chain of over 600 Malaysian companies.

“Of the 20,000, over 3,000 are made up of MMC-Gamuda joint venture staff, and of this, more than 60% are Bumiputeras,” it said in a statement in response to reports that the finance ministry had terminated the contract after failing to reach an agreement on reducing the costs of the project.

“In addition, the termination will unjustifiably expose MMC-Gamuda to a flood of lawsuits for compensation from terminated employees, sub-contractors, suppliers, manufacturers, and so on, whose contracts will similarly be terminated due to no fault of theirs,” it said.