MMC-Gamuda wants extra RM1.5b for rail job

By Shannon Teoh

Malaysian Insider, 21 May 2012

KUALA LUMPUR, May 21 — MMC-Gamuda is due to submit a RM1.5 billion variation order to the government for cost overruns in the Ipoh-Padang Besar Electrified Double Track (EDTP), according to the Business Times.

The financial section of the New Straits Times reported today that the main contractor will also ask for an extension for completion from end-2014 to up to 2016 despite the northern sector EDTP project deadline already extended by two years.

File photo of a train running on a completed section of the double-tracking project. — Picture courtesy of www.malayarailway.com

It quoted sources as saying “there is already cost overrun for the project, which is halfway completed.”

“The civil works are 70 per cent completed, and the systems side, only 30 per cent. There are still land issues and other unresolved matters on MMC-Gamuda JV’s part,” it quoted a source as saying.

MMC, owned by logistics tycoon Tan Sri Syed Mokhtar al-Bukhary, was awarded the contract for RM12.49 billion along with its joint-venture partner Gamuda in December 2007.

The contract comprises the design and construction of the infrastructure and systems works for the entire 329km alignment of the EDTP for this sector.

Originally slated for completion in January 2013, it was delayed due to land acquisition issues, and is part of the troubled EDTP for the entire rail line running from Padang Besar in the north, to Johor Baru down south.

“We think this is going to be another case like the Rawang-Ipoh EDTP, which took more than seven years to complete. The project cost had escalated from RM4.2 billion to RM6.3 billion,”Business Times quoted another source as saying.

Putrajaya has also delayed for over a decade the award of the Gemas-Johor Baru portion of the EDTP despite promising Chinese firms China Railway Construction Corp (CRCC), China Communications Construction (CCC) and state-owned China Railway Engineering Co (CREC) big-money contracts for the 197km link.

The Malaysian Insider had reported last December that Putrajaya has agreed to award a Chinese firm, most likely Chinese Road and Bridge Corporation (CRBC), with local partner Gamuda, the contract worth up to RM8 billion instead of frontrunner CRCC.

Business Times also reported that factors for the variation order claim include “incorrect estimation of the project’s work, the obstacles that the customer or project team discovers that require deviation from the original plan” and additional resources to be added to the project.

The northern sector EDTP is important for loss-making Keretapi Tanah Melayu Bhd (KTMB), the national railway company. Freight is currently KTMB’s biggest money earner, with the northern section contributing over 70 per cent to its revenue.

Once completed, the Ipoh-Padang Besar EDTP will cut travel time from Penang to Kuala Lumpur from nine to three hours.

When contacted by the financial section of the New Straits Times, Transport Minister Datuk Seri Kong Cho Ha stuck to the 2014 deadline.