Guan Eng: ECRL’s opex can go up to RM1b a year

This article first appeared in The Edge Financial Daily, on August 16, 2018.
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KUALA LUMPUR: The RM81 billion East Coast Rail Link (ECRL) would incur an annual operational expenditure (opex) of RM600 million to RM1 billion once the rail is completed, said Finance Minister Lim Guan Eng.

The project, tasked to China Communications Construction Co (CCCC), has been suspended and is under review pending the conclusion of discussions with Chinese parties after Council of Eminent Persons head Tun Daim Zainuddin’s recent visit to China.

“Although we have not reached a consensus on the discussion with China, [the gap in] the discussion between Daim, who went as a special envoy of Prime Minister Tun Dr Mahathir Mohamad, and Foreign Minister Wang Yi is narrowing. In any case, we must take cognisance of the liability of the project’s cost.

“Our intention is reducing debt [burden] and [we are] largely questioning the project’s viability and feasibility because the opex is high. Let’s not talk about the capital expenditure of the project when we can’t even afford the opex of between RM600 million and RM1 billion a year — a huge burden for Malaysia,” he added.

He was responding to an oral question by member of parliament (MP) Datuk Seri Dr Ismail Abdul Mutalib (Maran-Barisan Nasional) concerning the latest status of the ECRL’s construction, and justification for the rise in construction cost to a reported RM70 billion.

Guan Eng said on July 3, following Attorney-General Tommy Thomas’ advice, the Minister of Finance Inc’s wholly-owned subsidiary Malaysia Rail Link Sdn Bhd (MRL), which handles the project, issued an immediate stop-work order to CCCC.

“We were forced to issue the suspension order to cut the cost borne by the government. If we had not done that, we would have to bear the rising cost. To date, MRL had paid RM19.68 billion, made up of a RM10 billion deposit, and RM9.67 billion for work done. This is a large sum,” Guan Eng said.

Hence the need to review the project, he told MP Wong Kah Woh (Ipoh Timur-DAP) in Parliament yesterday in a reply to a supplementary question regarding the status of the review and discussion with China.

“It is a big issue. So is the need to review the project, so Malaysia is not burdened by this megaproject that would incur a mega debt,” he added.

About some 2,000 low-skilled workers laid-off due to the suspension order, Guan Eng said they should seek compensation from CCCC as they were employed by the company.