KUALA LUMPUR (Nov 11): Malaysia's planned Klang Valley Mass Rapid Transit Line 3's (MRT3) actual project cost is more important than its financing expenses because a more expensive project with cheaper financing will still cost more for the government to build.
Petaling Jaya Utara MP Tony Pua said this in a statement today in response to The Edge Financial Daily's (Edge FD) report yesterday. Edge FD, quoting Mass Rapid Transit Corp Sdn Bhd (MRT Corp) chief executive officer Datuk Seri Shahril Mokhtar, reported that financing is the key consideration for MRT Corp concerning MRT3's construction.
Shahril told Edge FD : “If I utilise funds from, say, DanaInfra, we would be pegged with an interest rate of about 5.1% at least ... the borrowing costs will kill us ... If foreign parties can give us 3% then why not, it’s good for all of us.”
The Malaysian Government via Minister of Finance, Inc owns 100% of MRT Corp. MRT Corp is the developer and asset owner of the Klang Valley Mass Rapid Transit project.
According to MRT Corp's MRT3 tender notice, the company is soliciting bids for the project on a turnkey basis. MRT3 is also known as the Circle Line, according to the notice.
Today, Pua said : "The biggest change comes in the project delivery structure which has gone from a project delivery partner model to a turnkey model. The cost of the switch might just end up a whole lot more for the Malaysian taxpayers at the end of the day."
"While financing costs is indeed important, what is more important is the actual project cost. If the actual project cost is say, 20% higher, then a 2% lower financing cost will still cost MRT Corp more in the end," he said.