Putrajaya will have to compensate contractors for the RM16.71 billion underground portion of the MRT2 project which has been cancelled pending a fresh tender process.
According to a source with knowledge of the negotiations with former project delivery partner (PDP) MMC-Gamuda, Putrajaya is contractually bound to compensate for works already performed on the underground portion up until the cancellation date.
This includes the cost of materials, materials that have already been ordered and maintenance costs for the preservation and removal of equipment resulting from the cancellation.
Yesterday, Finance Minister Lim Guan Eng announced that the underground portion was cancelled after Putrajaya and contractors MMC-Gamuda could not come to an agreement.
MMC-Gamuda will proceed with the over-ground portion which is valued at RM17.42 billion, down 23 percent from the original cost of RM22.64 billion agreed to by the Najib Abdul Razak administration in 2015.
Lim's announcement did not touch on the compensation which Malaysiakini understands is being finalised.
The MRT2 which will link Sungai Buloh to Putrajaya via the Golden Triangle will span 52.2km in length of which 13.5km is underground. Of the 37 stations, 11 are underground.
Construction began on Aug 12, 2016, and as of July this year, owners MRT Corp said the project was 30 percent completed.
Re-tender process soon
Meanwhile, the source said Putrajaya is aiming to hold a fresh international tender process for the underground portion within "two or three months".
"Hopefully, it can be done in two or three months," said the source.
In March 2016, MMC-Gamuda secured the contract after a bidding process which also involved the China Railway Group Ltd (CREC) and China Communications Construction Co Ltd.
This was decided during a procurement committee meeting chaired by Najib. At the time, the package was valued at RM15.47 billion with an alignment from the Jalan Ipoh North Escape Shaft to the Desa Waterpark South Portal.
Putrajaya's rationalisation of the MRT2 project saw the decision to transition MMC-Gamuda as a PDP to a turnkey contractor in order to see cost savings.
As a turnkey contractor, MMC-Gamuda will have to take construction risks, financing risks as well as pay sub-contractors.
Under the PDP model, payments would have been made directly by project owners MRT Corp, which is owned by the Finance Ministry. In turn, the MRT2 PDP would collect a fee, which is estimated at six percent, on top of the construction cost according to contractors interviewed by The Star.
The MRT2 cost rationalisation exercise is the latest in Putrajaya's effort to cut down on national spending and debts. It has so far put the East Coast Rail Line (ECRL) and the Kuala Lumpur-Singapore High-Speed Rail (HSR) on hold while paring down the cost for the LRT3 project.
Like the MRT2 project, Putrajaya was forced to pay some compensation for the delay in the HSR project which has been deferred to 2020. -Mkini
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