KLIA2 cost rises to RM3.9b, to only open April 2013

A model of the KLIA2 with the aerobridge. – Picture courtesy of MAHBA model of the KLIA2 with the aerobridge. – Picture courtesy of MAHBSEPANG, Nov 29 – The new low cost carrier terminal will cost between RM3.6 billion to RM3.9 billion and be operational in April 2013 said Malaysia Airports Holdings Berhad (MAHB) managing director Tan Sri Bashir Ahmad today.

This comes after controversy erupted over the cost and delivery date for the terminal that was originally projected to cost RM2 billion and be completed by the third quarter of 2011.

Bashir said however that changes to the design of KLIA2 including a longer runway and greater floorspace had increased the cost.

“When you increase the scope by so much, certainly cost will be incurred,” he said at a press conference today.

The runway was originally projected to be 2.5km but had been extended to 3.96km and the floorspace of the terminal increased from 150,000 sq m to 257,000 sq m.

“Even MAS with 747 can use the new runway,” he said. “So we said let’s bring forward the capital expenditure”

The MAHB managing director stressed that improvements such as the longer runway and an upgraded air traffic control tower was not exclusively for the new terminal but will benefit KLIA as a whole.

He added that MAHB is also funding RM530 million worth of government assets for KLIA2 including an upgraded airport traffic control tower and 15km of road infrastructure.

The MAHB chief also said that the board’s decision to hold a design competition for KLIA2 and the government’s requirements to award contracts via an open tender had added to the original project timeline.

“But I think the design competition was worth it and we fully supported the decision to have open tenders,” he said. “The number of applications we got was huge. Everytime we put out a tender, 40-50 companies applied.”

MAHB CFO Faizal Mansor said that they have several options in terms of raising additional funds including internal funds, debt and going to the equity markets.

He added that MAHB, which has a AAA rating from RAM Ratings, has only drawn down RM2.5 billion from the RM3.1 billion raised from the sukuk it issued.

“We’re paying for the government,” said an apparently indignant Bashir when asked if public funds will be used for KLIA2.

He denied that the cost increase will result in higher airport charges and said that the passenger charges for KLIA2 will be the same as the current LCCT and that the fees are regulated by the government with the next review in 2014.

Material presented by Bashir showed that the new terminal was delayed three times from its original completion date of September 2011 because of new requirements.

The first delay to April 2012 was due to the design competition and open tenders.

The delay to October 2012 was due to the extra commercial space added and the extension of the third runway.

The third delay to April 2013 was due to the recent decision to fully automate the baggage handling system.

Construction work in progress on the new low-cost terminal. — Picture by Jack OoiConstruction work in progress on the new low-cost terminal. — Picture by Jack OoiThe breakdown of the components leading to the increase in cost were:

- Larger terminal building : RM420 million. (150,000 sq m to 257,000 sq m)

- More aircraft stands : RM160 million (50 semi contact stands to 68 gates and 8 remote stands)

- Larger runway: RM180 million (2.5km long, 45m width to 3.96 km long, 60m width)

- Increased earthworks: RM670 million (4.85 million sq m to 11.19 million sq m)

- Aerobridges: RM120 million (80 aerobridges).

- Upgraded air traffic control tower: RM130 million (77m height to 93m height)

- Upgraded public infrastructure: RM260 million (8km with 1.5km elevated to 15km with 5.4 km elevated road.

KLIA2 will be the largest low cost carrier terminal (LCCT) when completed and will be able to handle 45 million passengers, three times the capacity of the current LCCT.

It will be connected to the Express Rail Link with the potential to be connected to KTM in the future.

It is also modular in design and will be able to add satellite terminals easily.

Much of the airport revenue is expected to be generated from retail sales and KLIA2 will have 50,000 sq m of commercial space.

MAHB is a public listed company controlled by state investment manager Khazanah Nasional.


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