The project delivery partner (PDP) for the Klang Valley MRT project, Gamuda-MMC, should be shouldering the cost overruns of the Sungai Buloh Kajang MRT line1. This statement was made by the government back then 5 years ago, probably to persuade all Malaysians that the 6% PDP-fee was justified.
The ballooning of MRT construction cost from around RM16bil (out of RM40 or RM47bil estimates back when the project first started) to RM21bil as announced by PM Najib recently should be the responsibility of the PDP, and it should be borne by the general Malaysian public.
The best figure we have were RM47bil2 for the construction of all 3 MRT lines, which total 150km, from a source on the government’s website, bringing the estimate cost of MRT Line 1 to around RM16bil. The figure of RM47bil in this report not only includes infrastructure cost (RM36bil) but also includes RM2bil for land acquisition and RM9bil for operating assets such as rolling stock.
According to news reports back in 2012, the PDP was allowed a cost overrun allowance of 15%, a figure deemed extraordinarily high back then3, and we were assured that anything beyond that, the PDP would not be entitled to their 6% fee and would have to bear the cost overruns1.
The government needs to come clean on the fees paid to the PDP, and well as the penalties imposed on the PDP immediately.
Malaysians should not be burnt again and again. It’s time the government also comes clean on all cost estimates of upcoming big projects and submits to Parliament the detailed reasoning for all these cost overruns.