KUALA LUMPUR (July 3): The final cost of the East Coast Rail Link (ECRL) project is actually RM81 billion and must be reduced significantly to make it viable financially, according to Minister of Finance Lim Guan Eng.

In a statement today, Lim also said the ECRL project is also not expected to cover its operating costs.

“Indeed the RM81 billion project cost does not include operating deficit, which cannot be determined for now,” he said.

Lim added that the Selangor state government objects strongly to the completion of Gombak-Port Klang portion of the rail line.

He said the ECRL project was first approved by the Cabinet on Oct 21, 2016 while the Engineering, Procurement, Construction and Commissioning Agreement was signed with China Communication Construction Company (CCCC) on Nov 1, 2016.

Lim said the original project scope was to build a rail line from the Integrated Transport Terminal (ITT) Gombak in Selangor to Wakaf Bharu in Kelantan at a cost of RM46 billion.

The finance minister explained that on May 13, 2017, the Barisan Nasional administration signed an additional agreement with CCCC to carry out Phase 2 of the project, which was to extend the line from ITT Gombak to Port Klang for RM9 billion.

He said that earlier on May 3, 2017, the Cabinet approved the northern extension of the project from Wakaf Bharu to Pengkalan Kubor in Kelantan, for the value of RM1.28 billion.

“Subsequently on Aug 23, 2017, the Cabinet further approved the upgrading of the ECRL to a double-tracking project which would cost an additional RM10.5 billion.

“Based on these figures, the basic cost of construction of the 688.3km rail line amounts to RM66.78 billion,” said Lim.

“However, the total cost of ECRL will be RM80.92 billion after taking into account land acquisition, interest, fees and other operational costs,” he went on to add.

Lim said that to date, the Government of Malaysia, via its wholly-owned operating subsidiary, Malaysia Rail Link Sdn Bhd (MRL), has paid CCCC the sum of RM19.68 billion, comprising of (i) advance payment of RM10.02 billion and (ii) progress payment of RM9.67 billion.

He stressed that based stated facts and figures, as well as the feasibility studies of the project, the ECRL project will only become financially and economically feasible if there is a drastic price reduction of the project by the CCCC.

“Discussions on cost will be held with the contracting parties and others involved in the project,” he said.

Lim said the Selangor state government’s objection is principally based on Selangor’s application to establish the 16km-long Klang Gates Quartz Ridge, which is the longest of its kind in the world, as a UNESCO World Heritage Site.

“Completing the Gombak-Port Klang link would guarantee the failure of Selangor’s application.

“Only after a significant price reduction on the ECRL is obtained, will the Federal Government enter into discussions with the Selangor state government on the merits of the ECRL project as compared to the possible UNESCO World Heritage Site listing,” he said.