A DELIBERATE WISH TO DEFRAUD & EMBEZZLE? PRASARANA ‘NEEDLESSLY OVERSIZED’ LRT3 PROJECT, CLAIMS REPORT

The cost of the LRT3 project had ballooned from RM9 billion in 2015 to the recent figure of RM31.65 billion because Prasarana needlessly expanded the scope of the project in the intervening years, claimed a Finance Ministry source.

“Along the way, the requirements and specifications were oversized, over-designed and unnecessarily accelerated.

“Examples include benchmarking the LRT stations to MRT size, luxury finishing, iconic designs, tripling train capacity compared to feasibility studies, and building tunnels and underground stations at low-ridership locations.

“As a result, the cost of construction, before adding all other costs, already increased from the announced RM9 billion to RM15.8 billion that was awarded in January this year,” said the source who has knowledge on the matter, but declined to be named.

After initially expressing reservation at the high costs of the LRT3 project, Finance Minister Lim Guan Eng had on Thursday announced that the project will continue, but its cost had been slashed by RM15.02 billion – or by 47 percent – from RM31.65 billion to RM16.63 billion.

“This cost will include all project costs, including but not limited to Work Package Contracts (WPC), land acquisition, project management, consultancy fees, operational and overhead costs, as well as interests during construction,” he said.

He had added that the RM15 billion savings also resulted in additional savings to taxpayers of up to RM14 billion in interest costs over the period of the loan financing.

The LRT3 project is a 37-km light rail transit line spanning from Johan Jaya in Klang to Bandar Utama in Petaling Jaya. It is purported to have the capacity of 36,700 passenger per hour each way.

Then-prime minister Najib Abdul Razak said in 2015 that the project would cost RM9 billion to construct, whereas land acquisition would cost another RM1 billion.

However, the present government’s cost-cutting measures entailed reducing the number and size of trains being ordered, reducing the size of the train depot, reducing the size of the train stations from the MRT standard to those of the Kelana Jaya line LRT, and deferring the construction of five LRT stations.

It also cancelled a two-kilometre tunnel and underground station in Shah Alam, and extended the completion time of the project from 2020 to 2024 to reduce construction costs inflated by “acceleration costs”.

The cost-cutting measures prompted fears that this would result in “sardine can” conditions along the rail line.

‘Provisions made for new and ungraded stations’

Separately, Prasarana issued a statement this morning saying that it was fully aware that RM10 billion government guarantee approved in 2015 was inadequate.

It only accounted for the cost of the WPCs and the supply of feeder buses, and land acquisition.

“The initial government guarantee excluded GST (now no longer required); fee for the Project Delivery Partner (PDP); PDP reimbursable cost; contingencies; owner’s cost including contributions to utilities companies, staff cots, etc; owner’s consultancy services eg independent checking engineer reported to the Land Transport Commission (SPAD); preliminary and general costs; land rental; cost claim; and interest during construction.

“On March 30, 2018, Prasarana formally requested approval to issue an additional RM22 billion government guaranteed bonds with expectation that the final cost of LRT3 would increase to RM31.65 billion,” it said.

It said it would support the government’s decision to remove stations where ridership is expected to be low, and SPAD has allowed the removal.

“Nevertheless, provisions have been made for new stations to built, or existing stations to be upgraded when demand increases in the future,” it said.

– M’kini