KUALA LUMPUR (July 13): Shares in George Kent (Malaysia) Bhd and Malaysian Resources Corp Bhd (MRCB) rallied yesterday after Finance Minister Lim Guan Eng announced that the cabinet had approved the continuation of the light rail transit Line 3 (LRT3) project at a final cost of RM16.63 billion.

This confirmed yesterday’s report by The Edge Financial Daily that the government would work with the project delivery partner (PDP) to lower the project’s cost.

In a statement yesterday, Guan Eng said the final total cost of the LRT3 project is reduced by 47% from RM31.65 billion to RM16.63 bilion, saving Malaysians a total of RM15.02 billion.

He said this will include all project costs, including but not limited to work package contracts, land acquisition, project management, consultancy fees, operational and overhead costs, as well as interest during construction.

A thorough renegotiation and rationalisation exercise of the LRT3 project is being undertaken with all key stakeholders, including project owner Prasarana Malaysia Bhd, MRCB-George Kent (M) Bhd joint venture (MRCB-GK JV) — which is the PDP — and the Land Public Transport Commission, Guan Eng added.

However, the completion date of the LRT3, stretching from Johan Setia (Klang) to Bandar Utama (Petaling Jaya), has been extended from 2020 to 2024 to further reduce construction cost, which Guan Eng said was inflated.

The construction of the LRT3 will be restructured from a PDP model to a “fixed price contract” with MRCB-GK JV, he said.

“This will ensure that the price will be fixed and will not be subject to cost overruns. The details of this contract will be disclosed at a later stage,” he added.

The new LRT line is expected to serve a population of two million with a capacity to transport 36,700 passengers per hour each way.

George Kent shares hit limit up after rising 30 sen in early trade yesterday. The stock surged as much as 30.3% to close at its intraday high of RM1.29, with 78.81 million shares done. It was the fourth most active stock, and fifth top gainer on Bursa Malaysia. Its market capitalisation stood at RM721.5 million.

George Kent’s JV partner MRCB also saw its shares rise as much as 32.8% to hit an intraday high of 77 sen in early trade. The stock ended the day 16 sen or 27.59% higher at 74 sen, with 199.6 million shares traded. It was the top active stock and among the top gainers. Its market capitalisation stood at RM3.25 billion.

According to Guan Eng, some of the key steps taken to reduce and rationalise project costs included reducing the order of 42 sets of six-car trains to 22 sets of three-car trains, shelving the construction of five stations with very low projected passenger ridership until such a time the demand is deemed necessary for these stations to be built, and cancelling an unnecessary 2km tunnel for the LRT together with an underground station in Persiaran Hishamuddin, Shah Alam.

This article first appeared in The Edge Financial Daily, on July 13, 2018.

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