MMC-Gamuda Regains Underground Works Contract for MRT2 After Larger Cost Reduction

Diane Foo Eu LynnOctober 29, 2018

 

After agreeing to a bigger cost reduction of RM3.6 billion, MMC-Gamuda has finally been given the go signal to continue with the underground works for the Mass Rail Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) project, reported The Sun Daily.

“This means that the construction cost (excluding interest during construction, land acquisition costs and other costs) of MRT2 has been successfully reduced by RM8.82 billion or 22.4 percent from RM39.35 billion to RM30.53 billion,” said Finance Minister Lim Guan Eng.

MMC-Gamuda had earlier offered a RM2.13 billion cost reduction for the underground works that was rejected by the ministry. With this, MMC-Gamuda’s contract for underground works was terminated.

However, Prime Minister Tun Dr. Mahathir Mohamad personally requested the ministry to conduct a final negotiation with MMC-Gamuda.

During the fresh round of talks on 22 October, MMC-Gamuda agreed to a total reduction of RM3.6 billion.

Lim revealed that the Cabinet has “agreed to MMC-Gamuda’s new offer and the cost rationalisation exercise”.

“All above-ground stations will continue to be built as planned earlier while two underground stations – Bandar Malaysia (North) and Bandar Malaysia (South) – will be postponed, bringing the total number of stations from the original 35 to 33 now,” he added.

The continuation of the above ground works for the MRT2 was earlier approved by the Cabinet, with MMC-Gamuda as a turnkey contractor at a RM17.42 billion cost, down 23 percent from its original cost of RM22.64 billion.

MMC-Gamuda will now continue to be the contractor for the underground works also at a total cost of RM13.11 billion.

Lim explained that the government is committed to obtaining value for money for all government expenditures particularly when the project entails large amounts of debt.

“The final cost savings of RM8.82 billion or 22.4 percent for MRT2 will reduce future fares that need to be paid by MRT users, which would inadvertently increase the usage of public transportation in the Klang Valley,” he said.

 

This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my

 

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