Malaysia's new light rail project to proceed at nearly half the cost: Finance minister
KUALA LUMPUR: Malaysia’s Light Rail Transit 3 (LRT 3) project will proceed at RM16.6 billion (US$4 billion), which is nearly half the earlier projected cost of RM31.6 billion, Finance Minister Lim Guan Eng announced on Thursday (Jul 12).
Lim had reportedly said that the initial cost of the LRT 3 that was projected by local public transport company Prasarana Malaysia Berhad was due to poor management and that it should be drastically reduced.
Prasarana submitted the projected cost on Mar 30, and sought additional financing of RM22 billion in the form of government guarantees, on top of the initial RM10 billion granted in 2015 to finance the project.
“The Cabinet, at its meeting yesterday, has approved the continuation of the LRT3 project at a final cost of RM16.63 billion. It is reduced by 47 per cent from RM31.65 billion to RM16.63 billion, saving Malaysians a total of RM15.02 billion,” Lim said.
This cost would include, but is not limited to, work package contracts, land acquisition, project management, consultation fees, operational and overhead costs, as well as, interest during construction, Lim said in a statement.
The new LRT 3 line, which will measure about 37km, is expected to serve two million people and will have the capacity to transport 36,700 passengers per hour each way.
The reduction in cost was possible through renegotiation and a rationalisation exercise with all key stakeholders including Prasarana, project delivery partner MRCB-George Kent joint venture (MRCB-GK JV) and the Land Public Transportation Commission.
“One critical criterion for the review was that the integrity of the 37km LRT3 line from Johan Setia (Klang) to Bandar Utama (Petaling Jaya) must be maintained. In addition, the safety, frequency and quality of service must meet the requirements of the regulators,” Lim said.
The order of 42 sets of six-car trains was reduced to 22 sets of three-car trains, he said.
Based on the project’s feasibility study, the 22 sets of three-car trains was more than sufficient to cope with the anticipated passenger demand until the year 2035, Lim said.
He added that the construction size of the LRT 3 train depot will be decreased due to the reduced number of LRT trains to be ordered.
This means streamlining the size and design of the LRT stations based on the Kelana Jaya LRT line standards instead of being benchmarked against the much larger MRT stations, Lim said.
Five stations, namely Lien Hoe, Temasya, SIRIM, Bukit Raja and Bandar Botanic, which have very low projected passenger ridership, would be shelved until needed, Lim said.
A 2km tunnel and an underground station at Persiaran Hishamuddin, Shah Alam, will be cancelled, Lim said, adding that they were unnecessary.
He added that the timeline to complete the LRT3 project would be extended from 2020 to 2024 to reduce construction cost, which was inflated due to “acceleration costs”.
“To speed up the project would mean incurring additional costs,” Lim said, adding that the construction of the LRT3 project would be restructured from a project-delivery-partner model to a “fixed price contract” with MRCB-GK JV.
This, Lim said, is to ensure that the price of the project would be fixed and not subjected to cost overruns. The details of this contract would be disclosed at a later stage.
The cost savings would also result in additional savings of up to RM14 billion for taxpayers due to interest cost over the period of the loan financing.
“The 47 per cent reduction in cost demonstrates that the new Federal Government is ‘walking the talk’ in securing significant cost reductions for excessively-priced projects caused by the poor governance of the previous government,” Lim added.