HSR back on the cards but with different alignment

This article first appeared in The Edge Malaysia Weekly, on July 11, 2022 - July 17, 2022.
HSR back on the cards but with different alignment
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THE government is undertaking a study on the feasibility of the multibillion-ringgit High Speed Rail (HSR) project and is considering a new alignment running up north linking either Penang or Bangkok in Thailand to Johor, sources say.

“It’s at the pre-feasibility stage, so it’s still early days, but yes, it is being looked at. Maybe a decision will be made after a proper feasibility study a year or two down the road, at the earliest,” one source says.

When asked if the train will run from Penang or Bangkok, the source says that the options are still being considered.

A WhatsApp message from The Edge to Transport Minister Datuk Seri Dr Wee Ka Siong remained unanswered as at press time.

It is understood that the study is being undertaken by MyHSR Corp Sdn Bhd — a company wholly owned by the Minister of Finance Inc and under the supervision of the Ministry of Transport — which is responsible for the development and implementation of the HSR project.

The study for this new alignment comes after Malaysia and Singapore terminated plans to build a 350km, approximately RM50 billion line connecting Kuala Lumpur and the island state in early January 2021. The project was terminated as both countries could not reach an agreement on several changes that the Malaysian government proposed.

Plans for the construction of the HSR were mooted in 2016 and the termination resulted in Malaysia having to pay RM320.27 million in compensation “for costs incurred for the development of the HSR Project, and in relation to the extension of suspension of the HSR Project”, a press release from the Economic Planning Unit of the Prime Minister’s Department said.

In May 2018, a 50:50 Gamuda Bhd-Malaysian Resources Corp Bhd consortium known as MRCB Gamuda Consortium was appointed the project delivery partner (PDP) for the north package of the HSR, from Kuala Lumpur to the state border between Melaka and Johor.

Meanwhile, a consortium of YTL Corp Bhd and Lembaga Tabung Haji was awarded the PDP role for the southern section, which was to stretch from the southern side of the Melaka station to the international boundary between Malaysia and Singapore.

On its website, MyHSR says, “In line with the agreement by the Governments of Malaysia and Singapore to suspend the HSR Project, a more affordable HSR will be identified and proposed to the Government of Malaysia for consideration after performing value engineering and other required studies. MyHSR Corp had been tasked to identify an alternative approach to the KL-SG HSR Project, by reassessing the proposed alignment, station locations, and business model.”

Could this latest plan be part of MyHSR’s new proposal?

Another source says that he had heard about the plans “to build a HSR from up north to Johor” and that the alignment would exclude Singapore. He adds that the multibillion-ringgit initiative would be undertaken via a private finance initiative (PFI) or a similar funding mechanism.

An engineering consultant The Edge spoke to says the only PFI that would make sense is a deferred payment, or one where the government subsidises the shortfall in profits of the ridership to the company that builds the HSR.

“I don’t think there is any railway in the world that can be self-financing,” he comments.

As an example, he brings up the funding difficulties for the RM39 billion (cost of construction and land acquisition) Mass Rapid Transit 3 Circle Line or MRT3 Circle Line, which will form a 51km circular alignment around the city centre. This line will have 31 stations, 10 of which will double as interchange stations with eight existing rail lines in the Klang Valley.

The tender briefings for the MRT3 project were held in late May. A key condition put in the tender documents by asset owner Mass Rapid Transit Corp Sdn Bhd (MRT Corp) is that interested bidders should be able to fund at least two years of work. This would mean that only companies with big balance sheets will be able to bid for the main packages.

“As Malaysia is perceived to be in a financial bind, I don’t quite know how the plan will pan out,” the engineering consultant says.

He adds that the greater the distance and the larger the population between the two cities connected, the greater the viability of an HSR line. He believes, however, that an alignment that excludes Singapore would not be as favourable as one that does as the city state is, after all, the financial capital of Asia.

“From both Kuala Lumpur and Bangkok, I can envisage people travelling to and from Singapore. I am not certain of the success of the outcome if the final stop is in Johor,” he says.

A political watcher explains, however, that the plan is for major developments in the area where the HSR ends — in this case, Johor.

“This was the argument put forth when Tun Dr Mahathir Mohamad was the prime minister for the second time (May 2018 to March 2020) as the major development will be at the starting and culmination points of the rail line … in this case, in Johor for certain,” he says.

There is also the question of whether MyHSR CEO Datuk Mohd Nur Ismal Kamal’s contract, which expires in mid-July, will be renewed. Mohd Nur Ismal has been CEO since 2015. His contract expired at the end of 2019, but was extended on July 11, 2020.

Mohd Nur Ismal has a Master of Business Administration in Strategy, Finance and Marketing from Kellogg Graduate School of Management, Northwestern University, Illinois, and was previously the CEO of the Land Public Transport Commission or SPAD, which is now known as the Land Public Transport Agency. He has extensive experience in the Malaysian public transport industry since 2008 and was a key person in the development of the Klang Valley MRT project, among others.

While Mohd Nur Ismal’s extension would seem like a foregone conclusion, the current uncertain political climate makes such appointments uncertain.

Others also question if the new HSR plan is merely a well-timed announcement to create a feel-good factor prior to the calling of the 15th general election, which must be held by September 2023.

 

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