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LRT3 to proceed at almost half the cost - MOF

Last update: 12/07/2018
KUALA LUMPUR, July 12 (Bernama) -- The 37km Light Rail Transit 3 (LRT3) project, which is critical to alleviate the issue of traffic congestion, will be continued, albeit, at a lower cost of RM16.63 billion, down by 47 per cent from the initial RM31.65 billion, Minister of Finance Lim Guan Eng announced.

"The Cabinet, at its meeting yesterday, has approved the continuation of the LRT3 project at a final cost of RM16.63 billion. It is reduced by 47 per cent from RM31.65 billion to RM16.63 billion, saving Malaysians a total of RM15.02 billion," he said.

This cost would 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, interest during construction, he said in a statement today.

The new LRT line is expected to serve two million people with the capacity to transport 36,700 passengers per hour each way.

The reduction in cost was possible through renegotiation and a rationalisation exercise of the LRT3 project undertaken with all key stakeholders including Prasarana, MRCB-George Kent joint venture (MRCB-GK JV) who is the project delivery partner (PDP) and the Land Public Transportation Commission (SPAD).

"One critical criteria for the review was that the integrity of the 37km LRT3 line from Johan Setia (Klang) to Bandar Utama (Petaling Jaya) must be maintained. In addition, the safety, frequency and quality of service must meet the requirements of the regulators," he pointed out.

Among the key steps taken to reduce and rationalise the cost of the project included reducing the order of 42 sets of six-car trains to 22 sets of three-car trains.

Lim said based on the LRT3 project feasibility study, the 22 sets of three-car trains was more than sufficient to cope with the anticipated passenger demand until the year 2035 before the need to order an additional three-car trains.

The other was reducing the construction size of the LRT train depot due to the significantly reduced number of LRT trains to be acquired.

This means streamlining the size and design of the LRT stations based on the Kelana Jaya LRT line standards instead of being benchmarked against the much larger MRT stations, he said.

It was also decided that five stations, namely Lien Hoe, Temasya, SIRIM, Bukit Raja and Bandar Botanic, with a very low projected passenger ridership, would be shelved until such time when demand is deemed necessary for these stations to be built.

Lim also disclosed that an unnecessary 2km tunnel for the LRT together with an underground station at Persiaran Hishamuddin, Shah Alam was also cancelled.

Lastly , the timeline to complete the LRT3 project would be extended from 2020 to 2024 in order to further reduce construction cost which was inflated due to 'acceleration costs'.

"To speed up the project would mean incurring additional costs," Lim said, adding that the construction of the LRT3 project would be restructured from a PDP model to a 'fixed price contract' with MRCB-GK JV.

This, he said, was to ensure that the price would be fixed and not subjected to cost overruns. The details of this contract would be disclosed at a later stage.

The savings of more than RM15 billion would not only mean a massive reduction of RM15 billion in debt to be incurred, but also result in additional savings to the tax-payers of up to RM14 billion in interest cost over the period of the loan financing.

"The 47 per cent reduction in cost demonstrates that the new Federal Government is 'walking the talk' in securing significant cost reductions for excessively-priced projects caused by the poor governance of the previous government," he added.

To recap, On March 30, 2018, Prasarana Malaysia Bhd submitted the latest projected cost for the LRT3 project which amounted to RM31.65 billion and sought additional financing of RM22 billion in the form of government guarantees, on top of the initial RM10 billion granted in 2015 to finance the project.



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