Rafizi: Why MRT3 model not used earlier if it can save money?

PKR vice-president Rafizi Ramli questioned why the MRT3's turnkey contractor model was not used from the beginning for the MRT1 and MRT2 projects if it was the cheaper option, as claimed by MRT Corp.

The MRT1 and MRT2 had used the project delivery partner (PDP) model in which the financing was raised by state-owned DanaInfra Nasional Berhad while the MMC-Gamuda consortium was appointed to oversee the project and is paid six percent of the total works contract value.

However, MRT3 will require a turnkey contractor to raise its own financing for 90 percent of the project value.

"I had objected to the PDP model since 2010 due to the conflict of interest as MMC-Gamuda, which was appointed as the PDP, had also bid for the biggest construction package under MRT1, which involves the construction of the underground track and stations.

"MRT Corp chief executive officer Shahril Mokhtar's admission that the turnkey concept can save the people billions of ringgit indirectly shows that the PDP model in MRT1 and MRT2 was more expensive than it should be," he said in a statement today.

Shahril had said the turnkey model was necessary for MRT3 as the cost would be significantly higher with the most part of the line being underground.

MRT1 (Sungai Besi-Kajang Line) was completed at RM21 billion while the MRT2 (Sungai Besi-Serdang-Putrajaya line) was expected to cost RM32 billion.

The MRT3, a circle line intended to integrate the MRT1, and MRT2 and all existing rail lines together, will cost an estimated RM35 to RM40 billion.

On the flip side, Rafizi said while the turnkey model may be more cost-effective, the criteria meant that only companies in China had the capability to bid for the role of turnkey contractor.

According to the terms of the tender, the aspiring turnkey contractor will need to secure financing with an eight-year repayment moratorium and the term of the loan will need to be 30 years.

"No company in Malaysia or anywhere in the world, except in China, has the capability to raise such funds," he said.

As the turnkey contractor is raising its own financing for MRT3 it will also be able to determine the subcontractors that will construct the different components of the project.

Under the PDP model for MRT1 and MRT2, as the funds were raised by state-owned Danainfra, MRT Corp was able to tender out the construction packages to local companies.

Rafizi said he will propose that Pakatan Harapan review the details of the MRT3 project if the coalition wins in the next general election.

He added that a Harapan government would also have the power to cancel the contract if it is found the aspiring bidders had made any political contribution for the upcoming general election.- Mkini