Report: MoF mulls bypassing Prasarana to cut LRT3 cost

KUALA LUMPUR, July 10 — The cost of completing the Light Rail Transit Line 3 (LRT3) project can be reduced by nearly RM6 billion should it go back to the original design plan, according to a report.

Quoting sources, The Star report said that the Ministry of Finance (MoF) is reviewing the project to bring its cost down.

“The cost of the project at around RM15 billion is deemed expensive as the original cost was only RM9 billion. The cost escalation was due to changes in the original design of the 37km track,” said the report.

The amount stipulated does not include land acquisition and financing costs.

The report added that “additional variation orders” by Prasarana Malaysia Bhd due to changes in the original design of the 37km track was the reason why the cost of the LRT3 project had ballooned from RM9 billion to RM15 billion.

“Sources pointed out that cutting down the number of stations, cars and design of the stations would see the cost falling back to around RM9 billion, which was the cost the original project delivery partners (PDPs) had agreed on when they inked the deal for the LRT3,” The Star added.

In 2015, Prasarana had appointed Malaysian Resources Corp Berhad and George Kent (M) Berhad as the project delivery partner (PDP) for the LRT3 project at an approved construction budget of RM9 billion.

If the project is aborted at this stage, compensation to the tune of RM200 million will have to be forked out to the company.

Among the options being studied to bring down the cost of the project include scaling down the size of the project and for the project to be carried out on a turnkey basis.

“Using a turnkey method would help alleviate the debt burden from Prasarana to complete the LRT3 project,” The Star said quoting a consultant.

The LRT3 project is the first project by Prasarana to be implemented under the PDP model.

But unlike the PDP model that was implemented for the Klang Valley Mass Rapid Transit project, the total cost of the LRT3 was not finalised before the PDP contract was awarded in 2015.

This contributed to the current situation where the project had exceeded its initial budget.

This had also resulted in the number of stations being increased to 30 from the initial 26.

Prasarana had stated on its website that the PDP model allowed the LRT3 project to be rolled out efficiently in phases as opposed to appointing a turnkey contractor.

The PDP model, it said, also provided a single point of accountability for the entire project, with the PDP assuming the risk of cost overruns or delays.

The LRT3 project is a 37-km extension line from Bandar Utama to Klang through Shah Alam. When it was launched in 2015, it was projected to cost RM10 billion, including RM1 billion set aside for land acquisition.

The cost was also increased when Prasarana requested for project completion in six years instead of eight.