The Singapore Sunday Times reported yesterday that Malaysia’s second MRT line (MRT2) “will be rerouted from a densely populated suburb in the Klang Valley to a new township that is yet to be built on land belonging to 1Malaysia Development Bhd (1MDB)”.
The report said that such a move is expected to “not only delay the completion of the RM25 billion line but also incur extra cost for the government”.
According to MMC-Gamuda, who has been appointed, again without any tender exercise, as the Project Development Partner (PDP) for MRT2, the realignment will entail a delay of 3 to 6 months and a potential spike in cost due longer underground portions. These underground portions cost more than 4 times the surface equivalents.
The last minute realignment is despite the fact that MRT Corp has announced the appointment of Arup Jururunding Sdn Bhd as the “underground reference design consultant” for the project on 18 November last year in a contract worth RM44.4 million. Arup Jururunding’s scope of work includes reference design for tunnels, portals, shafts, cross-overs, sidings and ventilation for the original 8 underground stations.
The losers however will be the 200,000 middle and lower middle-income earners living in Cheras and Pandan where the original alignment would have passed through.
On the other hand, the Singapore Sunday Times report clearly highlights that the realignment is expected to significantly benefit 1MDB is 2 ways.
Firstly, the fact that the line now passes through Bandar Malaysia, even before a single construction stone is laid on the current military airfield, will clearly help 1MDB raise the value of its land bank significantly. Previous touted at a Gross Development Value (GDV) of RM20 billion, the figure the real estate development has inflated nearly 8-fold to RM150 billion after the “Strategic Review” conducted in January this year.
Secondly, it appears that 1MDB will also immediately benefit because the Federal Government will need to new acquire land from 1MDB for the purposes of obtaining access for the MRT2 line. If this were to happen, it would be an absolute travesty because 1MDB secured the Bandar Malaysia land, the current Sungai Besi airbase for a paltry RM75 per square feet.
The above clearly demonstrates that the Barisan Nasional Government will stop at nothing to bailout the financially-stricken and scandal-ridden 1MDB. With a monster RM42 billion debt or more, 1MDB is now desperate for cash to repay not only its principal but also its annual financing cost in excess of RM2 billion.
The Government has already awarded 1MDB a series of multi-billion ringgit power plant projects via direct negotiations in 2014, sold land to the company at heavily discounted prices, provided a “letter of support” to guarantee US$10 billion loans in 2013 and more recently offered a RM950 million cash advance in February to the company.
Despite claiming that an initial public offering of 1MDB power assets will solve it cashflow problems, it appears that the Government is working overtime to bailout 1MDB, both directly and indirectly.
Given such immense increase in value the MRT2 realignment gave to Bandar Malaysia, as well as the heavily discounted price the land was obtained, the Government should not have to pay a single sen to acquire the land for the purposes of the MRT construction.
To be fair to the residents of Cheras and Pandan who are now denied the mass rapid transit, the Government should impose a substantial development charge on 1MDB. The charge will go towards defraying the increase in cost of MRT2 as a result of the realignment, the cost of building the MRT station in Bandar Malaysia as well as to provide alternative public transport solutions for the negatively affected residents.