MOT cites legal, technical continuity for single-source Penang LRT Package 1 procurement

PETALING JAYA (May 22): The Ministry of Transport (MOT) has defended the use of a single-source Request for Proposal (RFP) mechanism for the procurement of the RM7.93 billion Package 1 contract of the Penang Mutiara Line LRT project, citing legal continuity and technical considerations.

The procurement approach has drawn public scrutiny amid broader concerns over transparency and cost management in large infrastructure projects, prompting MOT to issue a detailed clarification on Thursday (May 21).

The decision was made following the federal government's takeover of what was originally a Penang state government project under the Penang Transport Master Plan (PTMP), MOT said in a statement.

Project history and transition

The Mutiara Line LRT was initially structured as a state-led project financed through land sale proceeds from three reclaimed islands in southern Penang, known as the Penang South Islands Project.

In 2015, the Penang state government appointed SRS Consortium Sdn Bhd as project delivery partner through an open tender process.

In March 2024, the federal government agreed to finance and fully take over the project on condition that reclamation be limited to one island, with MRT Corp appointed as developer and asset owner following Cabinet approval.

"When the federal government took over, it had no direct contractual obligations with SRS Consortium, as the original obligations were between the state government and SRS Consortium," MOT said.

Why the single-source mechanism was used

The ministry said the decision to use the single-source mechanism was made following a request from the Penang state government, partly to avoid potential contractual disputes, as SRS Consortium had already been appointed through an open tender in 2015.

MOT added that SRS Consortium had accumulated institutional and technical knowledge related to track alignment, engineering studies, environmental impact assessment (EIA) approvals, social impact assessment (SIA) studies and railway schemes — all funded by the consortium itself.

"This continuity is an important consideration to expedite the implementation of this critical public infrastructure project," MOT said.

The ministry stressed that a single-source RFP differs from direct negotiations, which do not involve any prior competitive process.

Due diligence and cost assessment

MOT emphasised that the contract was not awarded without thorough review.

After being appointed as developer and asset owner, MRT Corp conducted detailed engineering assessments and infrastructure studies to refine rail alignment, scope of work, and reassess project cost estimates.

MRT Corp also obtained independent cost assessments from two separate quantity surveyors.

Contract procurement negotiations commenced in April 2024 and lasted approximately eight months, during which MRT Corp conducted comprehensive commercial, technical and cost assessments that the ministry said were aimed at ensuring optimal project value.

The ministry said the contract subsequently underwent a value management exercise in April 2025 as part of ongoing cost optimisation measures, with the final contract value set at RM7.93 billion.

Open tenders required for remaining packages

For Package 2 and Package 3 of the project, an open tender process is mandatory, reflecting the government's commitment to transparency and healthy competition in public procurement, MOT said.

According to previous project updates, the Mutiara Line LRT is targeted to commence operations in 2031.

The alignment will comprise 22 stations, with the Penang Sentral station in Butterworth connected to Macallum Street on the island via a 6km cross-strait bridge.

Additional reporting by Bernama

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