Lim Guan Eng blames the huge cost increase to Prasarana’s poor management and says there will be no additional funding for LRT3 unless cost is significantly reduced.
- Original cost – RM9 billion
- Projected total cost – RM31.45 billion
- Possible reduction – at least RM6 billion
The Ministry of Finance (MoF) will not support any additional funding required for the Light Rail Transit Line 3 (LRT3) unless the cost is “significantly rationalised” without compromising the rail network’s integrity, safety and service quality.
The ministry had requested project owner Prasarana Malaysia Bhd to drastically review the cost to ensure its viability, Finance Minister Lim Guan Eng said in a statement yesterday.
“The projected total cost of RM31.45 billion, due to poor management by Prasarana Malaysia, requires drastic reductions to make LRT3 feasible and cost-effective,” he said.
The latest cost estimate is significantly higher than the RM15 billion cited in recent news reports.
The original estimate when the project was launched in 2015 was RM9 billion.
Prasarana Malaysia obtained a government guarantee for an RM10 billion bond facility to fund the project in 2015.
However, the company requested an additional RM22 billion in government guarantee on March 30 this year to ensure funding for the project’s construction and completion, according to Lim.
The minister said certain news reports had indicated that the cost could be reduced by RM6 billion.
“The MoF wishes to state that much more than RM6 billion must be reduced if the LRT3 project is to proceed,” he added.
Lim said the LRT3 is a critical project aimed at alleviating the issue of traffic congestion along one of the most important and densely populated economic development corridor in the Klang Valley.
The 37km alignment connects Klang to Bandar Utama in Petaling Jaya.
Lim said LRT3 was expected to serve a two million population with the capacity to transport 36,700 passengers per hour each way.
A news report on Monday said Prasarana could take over the construction of the project from the project delivery partner – a 50:50 joint venture between Malaysian Resources Corp Bhd and George Kent (Malaysia) Bhd – in view of the massive cost overruns.