Biggest mega project: RM43b MRT proposal

For what is expected to be the biggest mega project of them all, the RM43 billion Mass Rapid Transit proposal has received little prominent media publicity and most Malaysians remain in the dark about it.

The ‘unsolicited proposal’ for a 180-200km partly underground railway network in Kuala Lumpur by Gamuda Bhd and MMC Corp is now undergoing feasibility studies by two government-appointed consultants, according to a report in The Star.

The actual project is expected to cost RM36 billion. Add land acquisition and rolling stock cost and the tab reportedly could come up to a jaw-dropping RM43 billion. (What about possible cost overruns?) That makes it the largest construction job under the Tenth Malaysia Plan.

The Gamuda MD is reported in the Star as saying the commercial investment return (IR) would be quite low though economically the IR would be quite high.

That might explain why the two firms are not interested in becoming the MRT operator. The Edge (14 June 2010) suggested that government-owned Syarikat Prasarana Negara Bhd, could end up with the tough job of actually owning and operating the system i.e. ‘holding the baby’ for the public.

The two firms are mostly interested in the lucrative tunnelling work, which has been estimated at RM14 billion, according to the Star report. The Edgehad earlier estimated the figure at RM10.8 billion. Either way, we are talking big money here.

Let’s look at who the major shareholders of Gamuda Bhd are as at 15 October 2009:

• Employees Provident Fund Board 10.09% (direct interest)
• Raja Dato’ Seri Eleena binti Raja Azlan Shah 7.43% (mostly deemed indirect interest through Generasi Setia)
• Generasi Setia (M) Sdn Bhd 7.42% (direct interest)
• Platinum Investment Management Limited 6.48% (direct interest)
• HSBC Holdings plc 5.37% (indirect interest) (who is behind this?)

The substantial shareholders of MMC Corp (which is the flagship company of Syed Mokhtar Al-Bukhary) as at 25 February 2010 are:

• Amanahraya Trustees Berhad (Skim Amanah Saham Bumiputera) 18.43% (direct)
• Employees Provident Fund Board 8.11% (direct)
• Seaport Terminal (Johore) Sdn Bhd 51.76% (direct)
• Indra Cita Sdn Bhd 51.76% (indirect – deemed interest through Seaport Terminal)
• Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor 51.76% (indirect – deemed interest through Indra City)

“He (Syed Mokthar) surfaced during the premiership of (Mahathir) and created waves, stayed through (Badawi’s) term, albeit with less fanfare, and now he appears to be an important corporate figure in Najib’s tenure,” the Edge quoted an unnamed Umno politician as saying. Syed Mokthar’s Tradewinds recently gained control of Bernas, which has a monopoly of rice distribution in the country, the weekly noted.

The weekly also made the following observations: In 2007, Gamuda and MMC were awarded the northern portion of the rail double-tracking job for RM12.5 billion. In April, DRB-Hicom, whose controlling shareholder is Syed Mokthar, reportedly received a letter of intent from the government to manufacture and deliver a dozen variants of the Malaysian AV-8 armoured wheeled vehicle.

Back to the MRT: do we even have a comprehensive public transport master plan for the Klang Valley? Has the public been adequately consulted? Have we really exploited the full potential of a more cost-effective bus rapid transport system?

Jose Barrock of The Edge wrote:

Like all large-scale projects, proper studies should be conducted, with the public at the centre of the equation. While the details trickle in, the merits of the deal need to be properly weighed, and the best proposal selected without resorting to other factors such as political clout.

The bottom line is, cost have to be kept low to ensure these gargantuan projects are viable and self-reliant in a minimum-case scenario. For starters, a proper tender should be held to ensure the best value for money when tendering out jobs.

If costs skyrocket, ticket costs are likely to be nudged upwards. Transport projects such as these should berakyat-centric and not aim to be money-spinners.

courtesy of AnilNetto.com