Search Articles

Find tips, tools and how-to guides on every aspect of property

MMC-Gamuda to continue MRT2 project with RM3.6b cost reduction



26 October, PETALING JAYA – MMC-Gamuda has received the green light to continue with the Mass Rail Transit Sungai Buloh-Serdang-Putrajaya Line (MRT2) project, after agreeing to a larger cost reduction of RM3.6 billion for the underground works.

The Finance Ministry said MMC-Gamuda agreed with its suggestion to further increase the cost reductions of the underground works from RM2.13 billion to RM3.6 billion, after the two parties conducted final negotiations.

“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% from RM39.35 billion to RM30.53 billion,” Finance Minister Lim Guan Eng said in a statement today.

Earlier, MMC-Gamuda offered a cost reduction of RM2.13 billion for the underground works, which was rejected by the ministry. The ministry then decided to terminate MMC-Gamuda and retender the underground works contract.

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

A fresh round of talks was carried out on Oct 22, 2018 conducted by Lim, where MMC-Gamuda agreed to a total reduction of RM3.6 billion or 21.5% for the underground works.

“Today, 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,” said Lim.

The previous decision to terminate the underground works contract will be rescinded and MMC-Gamuda will continue to be the contractor for the underground works for a total cost of RM13.11 billion.

The Cabinet had earlier approved the continuation of the above ground MRT2 works to be executed by MMC-Gamuda as a turnkey contractor with a cost of RM17.42 billion compared with the original cost of RM22.64 billion, representing savings of RM5.22 billion or 23%.

Lim said the government is committed to getting value for money for all its government expenditures especially when the projects involve large amounts of debt.

“The final cost savings of RM8.82 billion or 22.4% 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 added.


Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

More Articles