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Business, Economics

Malaysia avoids termination fee by renegotiating rail deal

The Chinese-Malaysian venture will go ahead.


Written by

Updated: April 16, 2019

The government decided to go back to the negotiation table on the East Coast Rail Link (ECRL) project because its termination would cost RM21.78bil with “nothing to show for it”, says Prime Minister Dr Mahathir Mohamad.

Dr Mahathir said in renegotiating the project, the government called for a more equitable deal, where the needs of Malaysians would be prioritised.

He explained that the Pakatan Harapan government’s main objection to the ECRL project was based on the way and speed at which the original contract was negotiated and signed in 2016.

“It was unjustified, a hefty lump sum price which lacked clarity in terms of technical specifications, price, and, by extension, economic justification.

With the new price tag, the construction cost is now RM68mil per km, against RM98mil per km originally.

On April 12, Malaysia Rail Link Sdn Bhd and China Communications Construction Company Ltd signed a supplementary agreement to pave the way for the resumption of the suspended project.

The alignment length was originally 688km, and is now reduced to 640km.

The new alignment will avoid the construction of the 17.8km long Genting Tunnel from Bentong to Gombak.

It will also avoid the Klang Gates Quartz Ridge in Selangor, which is being established as a Unesco World Heritage Site.

The rail line will comprise 20 stations, of which 14 are passenger stations, five are combined passenger and freight stations and one freight station.

The Putrajaya Sentral station will be an interchange with the existing Express Rail Link (ERL) and the future MRT2 SSP Line, to provide connectivity to the KL International Airport.

Travelling at a speed of 160km per hour, a passenger train journey from Putrajaya to Kota Baru in Kelantan would take approximately four hours.



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The Star
About the Author: The Star is an English-language newspaper based in Petaling Jaya, Malaysia.

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