Prasarana ponders taking over LRT 3 to control costs

PETALING JAYA (July 9): Prasarana Malaysia Bhd may take over the construction of the light rapid transit line 3 (LRT 3) from its project delivery partner (PDP) to contain ballooning costs, reported The Star.

The project’s cost had swelled to RM15 billion from the initial estimated RM9 billion, prompting the government to review the project, sources told the daily.

Among measures being considering include reducing the size of the project, going back to the turnkey model to finish the line or even postponing it until the country is on more solid financial footing.

A source said the government is likely to make a decision on the LRT 3 soon.

So far, about RM15 billion worth of construction jobs for the 37km extension from Bandar Utama to Klang through Shah Alam have been given out.

Meanwhile, the fee for the PDP – Malaysian Resources Corp Bhd (MRCB) and George Kent (M) Bhd, who were appointed by Prasarana in 2015 – at the current construction cost would stand at RM900 million.

The two companies were appointed as the PDP for the project at an approved construction budget of RM9 billion.

As the PDP, they are responsible for the design and construction of the LRT 3 line and will take on the risk of cost overruns or delays.

While the construction packages have been awarded, a research note from Kenanga Research says the project’s cost review has cast its future in doubt.

The project’s cost has not been finalised yet despite having appointed the PDP in 2015, likely due to amendments to the original LRT 3 design to incorporate new features and increase passenger capacity.

The Star reported that the cost of some of the stations have risen to almost RM200 million from RM80 million.