PETALING JAYA: With the Mass Rapid Transit 3 (MRT 3) project in Klang Valley given the go-ahead to proceed under Budget 2021, the focus has turned to the business model to undertake the project as well as the potential beneficiaries.
Industry sources said different structures were being explored and did not rule out the return of the project delivery partner model (PDP) for MRT3 as it could expedite work and ensure a timely completion.
“There have been discussions between the government and players to get feedback.
“Talks have reached a certain level of maturity although no decision has been finalised on the structure, ” said an industry source.
As for the beneficiaries, Gamuda Bhd and MMC Corp Bhd stand out as the obvious potential beneficiary for MRT 3 given their prior experience with MRT 1 and MRT 2 lines.
According to analysts, awarding the project to a MMC-Gamuda joint venture will provide continuity in construction activities after the completion of the MRT 2 project in 2022.
They note that the last ring of the final tunnel of the MRT2 construction was completed on Oct 11,2020 - signalling the end of tunneling activities.
Besides the PDP, the turnkey contract model is another structure that could be adopted.
Early this year, the MMC-Gamuda joint venture formalised their roles for MRT 2 as joint turnkey contractors from PDP previously. The third potential option is for MRT Corp Sdn Bhd - which is the developer and asset owner of the MRT project - to act as the conduit for the award of work packages.
Of the three, the last is seen as an unlikely option, according to analysts given that the organisation does not have the expertise like contractors do.
“MRT 3 is a shovel-ready project. But to hasten and ensure maximum economic benefits in the shortest possible time frame, we think the government could given some leeway in terms of doing away with an open tender and trust that contractors that were involved in previous projects would be the most suitable candidates, ” Alliance DBS’ analyst Chong Tjen San told StarBiz.
He said that under an open tender system, there is generally a time lag of at least 12-15 months before anything gets off the ground, adding if the MRT 3 is awarded to MMC-Gamuda via a turnkey contract, the impact of the project will filter down more quickly to the economy.
However, sources said the PDP model is also being explored to minimise risk and capitalise on the current low interest rate environment.
“The PDP model has its merits. There is a certain element of responsibility and supervision over other work package contractors.
The PDP can step in the event other contractors are not pulling their weight to ensure completion (of project) is timely, said Chong.
Detractors of PDP, on the other hand, argue that the structure could inflate contract values.
The MRT 3, known as the Circle Line, was already on the cusp of being awarded at a contract value of RM45bil (assuming about 705-80% of the 40km line would be underground) prior to the 14th General Election. It was planned to provide a loop link to the integrated public transport system in the Klang Valley by 2025.
Even with a lowered value of around RM20bil, the tunnelling portion could be worth RM12bil, or RM6bil each for MMC and Gamuda, said Chong.
He added that for MRT 1 and 2, the MMC-Gamuda JV was the lowest bidder for tunnelling works and did not even need to trigger the Swiss Challenge, which is a bidding process designed to elicit private sector initiative in core sector projects.
In a statement on Friday, Gamuda said MMC-Gamuda stands ready to assist the government and MRT Corp to accelerate the implementation of MRT 3 to have the maximum impact for job creation and economic stimulus as early as the third quarter of 2021.
According to the construction group, the MRT value chain covers over 1,800 companies, providing at least 35,000 jobs.
The timing and the funding structure for MRT3 is likely to be addressed in the medium term recovery plan in December, said analysts.
Source: The Star Online