KUALA LUMPUR, 22 February – The LRT Line 3 (LRT3) project, which has been a subject of huge debate in mid-2018, is firmly back on track as it marks a major milestone today with the signing of the Novation Agreement for LRT3.

Signed between Prasarana Malaysia Berhad (Prasarana), MRCB George Kent Sdn Bhd (MRCBGK) and nine Work Package Contractors (WPCs) at Prasarana’s corporate office in Bangsar here, the novation agreement is pursuant to the Fixed Price Contract that was signed between Prasarana and MRCB-GK on January 25. 
The Novation Agreement will allow the WPCs to migrate from the previous Project Delivery Partner (PDP) regime to the current Fixed Price Contract regime where MRCBGK is now the turnkey contractor while Prasarana takes the role as employer for the project.

The Fixed Price Contract for LRT3 was drawn up in line with instruction by the Ministry of Finance on 12 July 2018 to reduce the project cost to RM16.63 billion.

The signing of the landmark Novation Agreement was witnessed by Finance Minister, YB Lim Guan Eng; Transport Minister YB Loke Siew Fook and Minister of Federal Territories, Tuan Haji Khalid Abd. Samad.

Prasarana was represented by its President and Group Chief Executive Officer, Dato’ Mohamed Hazlan Mohamed Hussain while MRCBGK was represented by its LRT3 project director Patrick Hwang.

The nine companies signing the agreement today are infrastructure WPCs. They are

  • Mudajaya Corporation Sdn Bhd
  • WCT Construction Sdn Bhd
  • Gabungan Strategik Sdn Bhd
  • APEX Communications Sdn Bhd
  • Rahimkon Sdn Bhd
  • Sunway Construction Sdn Bhd
  • Pembinaan Jaya Zira Sdn Bhd
  • SN Akmida
  • Trans Resources Corporation (TRC) Sdn Bhd

Connecting Bandar Utama to Johan Setia in Klang, the completion date for the project under the new agreement is set for 28 February 2024.
Speaking to reporters after the ceremony, YB Lim said the novation agreement, which will see the cost of construction reduced by RM15.02 billion, will ensure cheaper fares for consumers once the service is open to the public. The reduction in construction cost, he said, would indirectly lead to an increase in ridership.

“As a public transportation system, I believe ticket prices should be at an affordable rate. There’s no use to have nice transportation system, if it is empty and not utilised by the public due to extremely high fares caused by the uncontrolled construction cost. You must remember when cost reduces, fares will also be cheaper. There is a strong link between the two.

Responding to questions, the Finance Minister reiterated that Prasarana will have the full backing of the ministry for the project; adding that MoF will help fund and guarantee the now price reduced RM16.63 billion project.

“Most of Prasarana projects have been funded by MoF given that they are an entity under us. For this project as well, we will also help fund through loans, guarantee and the likes. We have to do this in order to give confidence to the contractors that they will be paid,” he said.

Speaking ahead of the signing, Dato’ Mohamed Hazlan paid gratitude to YB Lim, who he said had played a steering role in bringing this project back on track; which is now based on new terms in the interest of the rakyat.

The LRT3 project started in August 2015 with initial budget of RM10 billion to serve 2 million population from Bandar Utama to Johan Setia.

On 30 March 2018, Prasarana informed the Finance Ministry that the estimated project cost has escalated to RM31.65 billion. When the new government came on board, the ministry instructed Prasarana to rationalise the scope, to reduce project cost and to change the model from PDP to Fixed Price Contract. As a result, the final project cost was reduced from RM31.65 billion to RM16.63 billion.

While maintaining the total length at 37.6km, the number of stations has been reduced from 26 stations to 20 stations and an additional five stations listed as future stations. Park ‘n ride facilities were reduced from 6,000 to 2,300 bays and the number of trains were revised from 42 sets of 6-car trains to 22 sets of 3-car trains.

Dato’ Mohamed Hazlan expressed confidence that Prasarana, MRCBGK and its partners will be able to meet the project’s new deadline of 28 February 2024. “With the commitment of YB Lim Guan Eng and the drive of the new Government for a better Malaysia, we are very confident that we can meet this deadline. To do this, however, we hope all our partners the LRT3 project especially MRCBGK and the WPCs would work closely and amicably with us at Prasarana to meet our deliverables. 

Dato’ Mohamed Hazlan also heaped praised on YB Loke Siew Fook for the minister’s untiring efforts and boundless commitment in transforming the country’s public transport system, which has reached new heights with some innovative projects driven by the ministry.He also thanked Tuan Haji Khalid and his team at the ministry and Dewan Bandaraya Kuala Lumpur for the support extended to Prasarana and its subsidiaries in transforming Kuala Lumpur as a Low Carbon City and a top livable city for Malaysians. “On behalf of Prasarana Malaysia and the people of Malaysia, we would like to say thank you and hope that the Government especially the ministries of Finance, Transport and Federal Territories will continue to provide more support; and inject incentives to Prasarana and its partners to further promote the usage of public transport in Malaysia,” added Dato’ Mohamed Hazlan.