After being idle for almost a year due to the government’s review of mega projects, construction works at the light rail transit 3 (LRT3) project is expected to resume in 2H 2019, at a reduced cost of RM16.63 billion.
A 47 percent reduction from the previous cost of RM31.65 billion, the RM16.63 billion will include land acquisition costs as well as interest payments during construction and other costs.
The implementation concept for the project is also remodelled to a fixed price contract from a project delivery partner (PDP).
Ann Wann, Chief Financial Officer at Malaysian Resources Corp Bhd (MRCB), said around 10 percent of the 37km rail line has been completed, and construction works would continue after the completion of the redesigning plans, reported The Sun Daily.
In September 2015, MRCB, along with joint venture (JV) partner George Kent (Malaysia) Bhd, were appointed as PDP for the LRT3 project at an approved budget of RM9 billion.
MRCB-George Kent JV’s contract is now fixed at RM11.86 billion.
“So the profit and revenue which we expected the JV to recognise last year obviously deferred and we expect the revenue and profit contribution from the project will reactivate in the second half of this year,” noted Amarjit Chhina, Chief Corporate Officer of MRCB.
Amarjit also revealed that the group’s shareholders have approved the termination of the concession agreement for the Eastern Dispersal Link Expressway’s (EDL) construction, management, operation and maintenance.
“I think the shareholders understand why we undertook the removal of the EDL from our balance sheet. We are very pleased with the outcome,” he said, adding that the sale of the expressway reduced the group’s debt by 36 percent.
He explained that the EDL sale will not affect the group’s revenue ending 31 December 2019 as the group stopped tolling on the EDL since 1 January 2018.
“However, despite being able to reduce our gearing over the last three years, our land bank has increased and construction order book also has increased dramatically during that period,” he said.
“In fact, I think our construction order book probably is the largest in the industry at the moment, at RM23 billion. Coupled with a strong balance sheet now, generally I think we are pretty in a good shape.”
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