Malaysia

Public must not swallow MRT overruns, Pua says

By Shannon Teoh
March 06, 2011

Pua said it presently seems as though there is no cap to the MRT’s costs. — file picPua said it presently seems as though there is no cap to the MRT’s costs. — file picKUALA LUMPUR, March 6 — Gamuda-MMC must bear any increase over their own RM36.6 billion valuation for the Klang Valley Mass Rapid Transit (MRT) after new estimates put the cost at over RM50 billion for the first line, DAP’s Tony Pua said today.

The Petaling Jaya Utara MP questioned whether the government was determined to go ahead and “build at whatever cost” after it admitted that the total cost of the new transport system would be higher than project delivery partner (PDP) Gamuda-MMC’s initial RM36.6 billion estimate.

If the contract was awarded based on the PDP’s own estimates, then Gamuda-MMC must be bound by its estimates and cost overruns should not be borne by the government, the DAP national publicity secretary said in a statement today.

“It makes a mockery of SPAD’s earlier claim that the Gamuda-MMC joint venture will bear all increases in costs,” he added, referring to the regulator, Land Public Transport Commission (SPAD)

SPAD chief executive officer Mohd Nur Ismal Kamal said yesterday that “the government was doing all it could to drive down the cost” but land acquisition and the price of rolling stock could push the price up to RM50 billion.

A CIMB Research report also said that, based on an average cost of RM353 million per kilometre, the entire 150km project could end up costing RM53 billion.

“The dramatic escalation of cost estimates for the Klang Valley MRT project before even the expected commencement of works in July... raises big question marks as to whether the project can ever be completed on time, and within budget,” Pua said.

He argued that the increase in the estimate necessitates a reassessment of the project on its continued viability and the risks involved.

Pua said that Mohd Nur Ismal’s statement made it clear that there was no fixed price for the project and appeared to suggest the government will push ahead no matter what the final bill turns out to be.

“Will the government continue with the project even if the cost were to escalate to RM60 or RM70 billion?” he asked.

He added that the government’s new cost estimate raised concerns that it has not conducted a thorough cost-benefit analysis to determine the point at which the direct and indirect costs become sufficiently high for the project to either be deferred or discontinued.

Pua then called for SPAD to disclose the PDP contract so that it could be known if there were guarantees against cost overruns as Gamuda-MMC was essentially the main contractor to the project.

SPAD must also disclose its detailed cost-benefits analysis of the MRT project for public scrutiny, along with any checks and balances to prevent both the government and the public from being taken for a ride, he said.

Since the MRT’s initial Sungai Buloh-Kajang line was put on display for public viewing, much doubt has been piled on the multibillion rail project.

The MRT system is an entry point project identified for the Greater Kuala Lumpur/Klang Valley National Key Economic Area (NKEA) and aims to increase public transport modal share from 18 per cent to 40 per cent by 2020.

With the 40 per cent public transport modal share, the government hopes that at least four million trips of the estimated total of 10 million are made via public transport.

The remaining six million trips will continue to be made via private vehicles.