TRANSIT took note of this article today which states that the first contract for the Klang Valley MRT project (for the Independent Check Engineer) has been approved by the Finance Ministry, overruling an earlier rejection by Prasarana.
MRT’s first contract runs into controversy (The Malaysian Insider)
Thu, Apr 14, 2011
By Jahabar Sadiq
KUALA LUMPUR, April 14 — The owners of the Klang Valley Mass Rapid Transit (MRT) will award their first major contract today for an independent check engineer (ICE) chosen by the government and who will be paid two per cent of the undetermined project cost, which is reportedly above market rates.
The Malaysian Insider understands that the consortium of HSS Integrated Sdn Bhd, Hong Kong’s MTR Corp Ltd and Canadian SNC-Lavalin is likely to land the contract despite being rejected by Syarikat Prasarana Berhad (SPNB) earlier for not putting a price to its brief — which usually costs up to 0.8 per cent of the total project.
[TRANSIT: Basically, what this means is that the consortium should have offered a price for the contract in their brief (basically, an application for the contract) – and normally the price is 0.8% of the total project costs but this consortium may be paid up to 2%
Well, people did say “let’s get the people from Hong Kong to plan & run the MRT….]
The total project cost for the MRT is estimated at RM36.6 billion for three rail lines through the Klang Valley when it was first proposed two years ago but that projection did not include cost of land and also rolling stock for the MRT.
“The SPNB board will meet today to approve the decision made by the exco at the Finance Ministry level. They will have to abide by the decisions as the money is paid by the government,” a source told The Malaysian Insider.
It is understood that the figure for the ICE could go as high as RM720 million based on the initial cost of the country’s largest infrastructure project.
But the source said the two per cent payment for the cost appeared steep against the industrial convention of just under one per cent for sub-contractors.
It is also learnt that SPNB should have ruled out HSS Integrated as it had an existing working relationship with MRT project delivery partner (PDP) MMC-Gamuda, though the current double-tracking rail project in north Malaysia.
“When the request for information was sent out before last Christmas, it stated clearly that the winning ICE should not have an existing relationship with the PDP. HSS has but it has been conveniently overlooked,” another source told The Malaysian Insider.
[TRANSIT: Clearly someone has not been paying attention. But who can blame them? The world of high-value contracts and megaprojects is dizzying in scale and totally confusing!]
SPNB chief executive Shahril Mokhtar said last week a one-stop technical committee will evaluate the bids before recommending it to a Finance Ministry committee that will decide on the contract awards.
[TRANSIT: It would be quite interesting to know who the members of the committee are.]
“It’s their money so they decide,” Shahril said, adding this was different from the current LRT extension works which is funded by bonds issued by SPNB.
SPNB had also not finalised the financing and project manager’s fees for the MRT although planning has started for initial civil engineering work to begin in November.
Regulator Land Public Transport Commission (SPAD) had said the Finance Ministry has set up a special purpose vehicle (SPV) to raise funds for the project but had admitted the method has yet to be determined.
[TRANSIT: In case you’re wondering, Prasarana has control over the finances for the LRT extensions, but control over the finances for the KVMRT is in the hands of the Finance Ministry. Where and how they will get the money – we are as clueless as everyone else!]
The SPNB chief had also said some 100 firms have applied for pre-qualification for the 16 packages in the elevated part of the 51km-long MRT; the deadline for pre-qualification ended on April 13.
The MRT is the country’s biggest infrastructure project and also the largest National Key Economic Area (NKEA) project under Prime Minister Datuk Seri Najib Razak’s New Economic Model (NEM).
The massive project is expected to generate 130,000 jobs in its five-year construction phase. The government hopes that more than half of the population in Greater KL will use the public transport system to prevent traffic congestion.
A few days ago TRANSIT was asked why we were being so critical of the MRT project – especially when we call ourselves the “The Association for the Improvement of Mass-Transit” and we told them the same thing we are telling you now:
- Criticism is not a bad thing – as long as it is warranted, reasonable and responsible, and effective.
- We do not like the way the MRT project was introduced, the way it is being rushed through, the way certain companies are involved in the rollout, and the way our ‘supposed-to-be-independent” government agencies are standing by the wayside and letting the project roll through.
Of course, we understand that when a runaway train is barreling down the tracks towards you, you do not try to stop it – you get out of the way.
But think of the destruction that train will leave behind – especially when it crashes and burns in a spectacular fashion.
Is it exaggeration to say that the future of Malaysia depends on making sure that the MRT project is run properly? We shudder to think of the consequences and what would happen if the project goes down the same track as the Port Klang Free Zone which cost the government billions of RM.
So that is why we have to do this – it is our duty as Malaysians to ask these tough questions and get people to ask tough questions of their wakil rakyat and their government.
If we Malaysians do not do this, we would be failing in our duty to ourselves and to our neighbours – as well as to our country.