GEORGE TOWN: The RM50 billion East Coast Rail Link (ECRL) is unlikely to be profitable in the long run and might need to be bailed out by the government, an Amanah leader said today.
Faiz Fadzil said this was because the forecast numbers of those expected to use the service were doubtful.
The rail project had been dubbed a “profitable venture” when it was likely not, he added in a statement today.
Faiz said ECRL’s 5.6 million passenger target in its first year of operations was a tall order considering Keretapi Tanah Melayu Bhd’s (KTMB) west coast service could only hit 3.75 million in 2019.
“What’s funny is that the government claims ECRL will carry more passengers and cargo to the east coast compared to KTMB, an old player serving major west coast ports,” the Penang assemblyman said.
“On top of that, ECRL is a single-track railway, compared to KTMB’s double-track ones on the west coast.
“Also, KTMB only managed to move six million tonnes of cargo in 2020, serving a line that has a catchment of 285 million tonnes in cargo.
“ECRL, on the other hand, claims it will achieve 26 million tonnes of cargo in its first year, from an area that has had a catchment of just 22 million tonnes.”
He said the transport minister had said that 70% of ECRL’s revenue would come from cargo, which increased the likelihood of it failing.
This, he said, was a reminder of an era when KTMB was rescued using taxpayers’ money.
Faiz said in the case of ECRL, any bailout would be in the form of paying off loans extended by China for the project.
“Since 85% of ECRL’s cost is borne through Chinese loans worth RM42.7 billion minus interest at a rate of 3.25% to be repaid in 20 years, the debts are expected to snowball to RM58 billion,” he said.
“Without sufficient income, it is highly unlikely that ECRL will be able to pay off these loans without government aid.
“It looks like in the end, taxpayers’ money will be used to bail out ECRL.”
The 665km rail network, which includes 59 tunnels, is estimated to cost RM50.27 billion. It will traverse four states – Kelantan, Terengganu, Pahang and Selangor.
FMT has contacted ECRL project and asset owner Malaysia Rail Link Sdn Bhd and the transport ministry for comment.