The world’s costliest railway

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This article first appeared in The Edge Malaysia Weekly, on November 7 - 13, 2016.

 

AT a cost of RM91.67 million per kilometre, the RM55 billion East Coast Rail Line (ECRL) could be one of the most expensive interstate rail and cargo lines to be built in the world, according to industry players.

“It could be the most expensive rail infrastructure project in the world in its class … It’s a good project but not at this ridiculous price,” says an executive from a construction outfit.

An analyst, who spoke on condition of anonymity, concurs. “There is an element of overpricing but I’m not sure what it is. State rail transport doesn’t generally cost that much.”

When asked if the high price could be because of the need to tunnel through the Titiwangsa mountain range, he replied with a curt “no”.

Compared with the mass rapid transit, light rail transit and high-speed rail, the ECRL is considerably cheaper. But the MRT, LRT and HSR fall under a different category of urban transport or people mover.

The MRT2 has a cost per kilometre of RM536 million or a total cost of RM30 billion while the LRT3 is expected to cost RM243 million per kilometre or RM9 billion in total. The HSR, at RM50 billion, costs RM143 million per kilometre.

The ECRL will have 600km of electrified double-tracking lines and is slated to link Port Klang and the integrated transport terminal in Gombak — both in the Klang Valley — to Bentong, Mentakab and Kuantan in Pahang; Kemaman, Kerteh and Kuala Terengganu in Terengganu; and Kota Bharu and Tumpat in Kelantan.

The executive estimates the construction cost of the rail line at only RM36 billion. He says a construction industry colleague, who is from a European outfit, believes the figure should be about RM32 billion for the entire stretch. Both estimates include the cost to tunnel through the Titiwangsa mountain range.

In a study conducted about five years ago on a proposed railway line from Kuala Lumpur to Gebeng in Pahang for freight trains, a local company projected a cost of RM12 billion to RM15 billion. It included the building of more than 10 stations and tunnelling works through the same mountain range, the executive adds.

“Even if — for whatever reason — we estimate the cost of construction of the portion from Kuala Lumpur to Kuantan at RM20 billion, considering that the terrain from Kuantan to the north of Kelantan is pretty flat, it shouldn’t cost RM30 billion … by my calculations, the whole thing (ECRL project) can be done for RM36 billion,” he reiterates.

He points out that the double-tracking project, which is still ongoing, costs considerably less at about RM28 billion for 808km, or about RM35.65 million per kilometre.

Interestingly, East Coast Economic Region Development Council CEO Datuk Jebasingam Issac John was quoted by news reports in April 2014 as saying that the price tag for the 600km railway line was RM30 billion and many Malaysian companies were interested in the job, including YTL Corp Bhd, MMC Corp Bhd, Gamuda Bhd, Malaysian Resources Corp Bhd, UEM Group Bhd and WCT Holdings Bhd.

For the cost of the ECRL to increase by 83% in a span of two years is unbelievable. While the depreciation of the ringgit may be one reason for the rise, could the increment be that much?

The analyst had projected a total cost of RM30 billion for the rail line, or RM50 million per kilometre, which is at his highest band. He feels that the high price tag is difficult to explain at this juncture.

Let us look at expensive rail projects elsewhere in the world. Kenya last month launched the construction of the 120km Phase 2A of the 489km standard-gauge railway line that will link Mombasa to the Ugandan border at a cost of US$1.76 billion (RM7.37 billion). This means it will cost about RM61.42 million per kilometre. There is no indication of the number of bridges that will be built or if there will be any tunnelling works involved.

In Bangladesh, China Railway Construction Corp signed a US$3.5 billion (RM14.65 billion) contract in August to build the 215km Padma rail line linking Dhaka to Jessore, which includes the construction of 66 major bridges, 244 minor bridges, 14 new stations and the procurement of 100 passenger coaches. And the project works out to RM68.14 million per kilometre.

In Ethiopia, the 375km Awash-Weldia railway line will have six tunnels, the longest being 1,530m, and be built on challenging terrain — Awash is 986m above sea level, Kombolcha, 1,842m, and Hara Gebeya (close to Weldia), 2,122m. Despite all these challenges, the railway line is estimated to cost US$1.7 billion (RM7.12 billion) or RM18.07 million per kilometre.

Transport Minister Datuk Seri Liow Tiong Lai attempted to explain the high cost of the ECRL by suggesting that the RM55 billion price tag was not just for the cost of construction but also the financing framework agreement. But this notion failed to gain traction.

Liow’s deputy, Datuk Abdul Aziz Kaprawi, did not fare much better when he said that the total cost had yet to be finalised, and that the RM55 billion figure was a rough estimate.

“The final figure has not been determined as the project is in the planning stage. The details will be finalised by the Economic Planning Unit and Ministry of Finance,” Aziz said.