KUALA LUMPUR (April 5): Ticket fares collected from the increased ridership of the Mass Rapid Transit Sungai Buloh-Kajang Line (MRT 1) will be used to pay bondholders of the RM21 billion worth of sukuk the government issued to finance the project.

The 30-year sukuk or Islamic bonds were issued by the Minister of Finance Inc's unit, DanaInfra Nasional Bhd, and fully backed by the government.

Deputy Finance Minister Datuk Othman Aziz told Parliament feasibility studies were done to determine if the fares would be sufficient to generate returns for the bonds based on increasing ridership.

"The line has been opened from Sungai Buloh to Semantan now, and it has a daily ridership of 14,000. When it opens till Kajang, ridership would rise to 40,000," he added.

In response to a supplementary question by PKR Gopeng MP Dr Lee Boon Chye — who wanted to know if the repayment of the bonds will burden the public and government's financials — Othman said once the usage of MRT 1 becomes a culture, the volume of riders and wagon capacity would be increased.

"From there, income would be generated and go towards the settling of bank borrowings. It is a long gestation period and we are confident the long-term use would be beneficial to our (country's) financial standing, and its people's comfort," he said.

DanaInfra established an RM8 billion sukuk for the preliminary requirements of MRT 1 in 2012, which it subsequently upsized to RM21 billion in 2014.

Othman said the sukuk rate is between 3.62% and 5.51%, depending on the bank borrowing's tenure.

"Financial sources for this line are from local banks, Kumpulan Wang Persaraan (Diperbadanankan), and local institutional investors," he added.

The entire 51km MRT 1 comprises 31 stations, and is targeted to be fully operational by July 2017.

Othman said the line is 97%-complete and has remained within the estimated cost of RM21 billion. He does not expect it to surpass the budgeted RM23 billion.