NEWS & EVENTS ONLINE EXCLUSIVE

Back on track

Construction works on the revived East Coast Rail Link (ECRL) project could resume as early as May 2019 if approvals from the relevant authorities are obtained.

“We are looking at a one-month window to restart the project; it’s highly likely to be next month,” said Darwis Abdul Razak, chief executive officer of project owner Malaysia Rail Link Sdn Bhd (MRL), as reported by The New Straits Times.

The ECRL project had been suspended by the new federal government since July 2018, when main contractor China Communications Construction Ltd (CCCC) received a notice to suspend all work, due to the high costs involved.

Following months of negotiations, MRL and CCC signed a supplementary agreement that will see the project resume at a lower cost of RM44 billion—down RM21.5bil, or about a third, of the original RM66 billion. This means the construction cost for the project is now at RM68 million per kilometre, against RM98 million per kilometre originally, which will result in a lower loan and less interest costs.

Under the supplementary agreement, the shortened 640-kilometre alignment will cut through five states instead of four, and avoid the construction of an 18-kilometre tunnel cutting into the Titiwangsa range.

The supplementary agreement covered the engineering, procurement, construction and commissioning aspects of the ECRL. Certain aspects of the project, as well as the loan, are still up for renegotiations, said Darwis.

BOOST FOR CONSTRUCTION PLAYERS

The revival of the ECRL augurs well for the local construction industry and will have a potential positive multiplier effect on the local economy with the increase in local participation.

Construction companies with rail-related experience and specialist contractors to be the main beneficiaries, said PublicInvest Research in its report.

“Amongst all, we think the big winners could be Gamuda given its expertise, and IJM Corp for its engineering construction capabilities and strong presence in the East Coast Economic Region corridor; IJM also owns 60% stake in Kuantan Port including 700 acres of industrial land near the port,” the report reads.

Lafarge Malaysia Bhd and HSS Engineers Bhd could also be immediate beneficiaries as both companies had clinched sizeable jobs from CCC previously, notes MIDF Research.

About 40 per cent of subcontractor jobs, worth some RM17.6 billion, are expected to benefit local players, although the size of contract and number of packages up for grabs are unknown at this point.

Affin Hwang Capital research expects more local participation in the project. from the supply of material to awarding work to local beneficiaries, says

In a statement, the Master Builders Association Malaysia (MBAM) hopes the government will ensure local contractors get full packages instead of ‘sub-labour works only’ to further elevate builders’ gain in 2019.

The Minority Business Chamber (MBC) said that local companies, especially qualified minority groups, should be given equal opportunities in the construction of the ECRL, particularly in engineering, procurement, construction and commissioning aspects, The Sun reports.  — Construction+ Online

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