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Sunday, 8 July 2018

(The Star) Major push to renegotiate deal

The closure of the East Coast Rail Link (ECRL) construction was sudden but a source from the Malaysia Rail Link Sdn Bhd (MRL) has disclosed that Finance Minister Lim Guan Eng will visit China at the end of this month to renegotiate the cost of the project with China Communications Construction Co Ltd (CCCC). And if the renegotiations go well, it can be resumed within two to three months.

The Finance Ministry issued a suspension notice through MoF Inc for all contracts related to East Coast Rail Link (ECRL) projects on Tuesday, after receiving instructions from Prime Minister Tun Dr Mahathir Mohamad.

Sources told Sin Chew Daily that the suspension of work resulted in a significant loss for CCCC. It is estimated that the loss of one day will be at least RM1mil. Equipment and machinery that have been contracted for lease will still have to be paid if they stop work. This includes a 100-million yuan TBM (Tunnel Boring Machine), which is expected to arrive in Malaysia in September and October.

Special officer to the Finance Minister Tony Pua said the ministry will discuss any compensations required due to the suspension of the project. When asked, Pua said he did not know how long the suspension order would last.

So far, the progress of the East Rail project has reached 14.84%, nearly 1% faster than expected. The government has paid more than RM10bil to contractors, including for construction and procurement.

The ECRL has also carried out seven tunnel blasting works. The industry believes that the project cannot be stopped for too long, so as not to affect the structure of the tunnel. After the blast at the foot of Genting Highlands, the tunnel boring machine from China must be used to excavate the tunnel.

The tunnel at the foot of Genting Highlands is the longest, about 18km, and about 16.3km was completed in April, while the Bentong tunnel is 830m long. The remaining tunnels are one to two kilometres long.

Based on the ECRL’s final construction fee of nearly RM81bil, the new Government wants to renegotiate the construction fee with the contractor, and so it has to suspend all work to avoid incurring construction and procurement costs during the shutdown.

The MRL has officially notified CCCC to temporarily suspend all of ECRL’s projects.

Lim pointed out earlier that the ECRL project must be able to significantly reduce the cost of construction for the federal Government to afford it. Lim and Transport Minister Anthony Loke, as well as members from the Council of Eminent Persons, are expected to go to China to renegotiate the ECRL contract, sources said.

When a Sin Chew reporter visited the ECRL construction site and Section 7 management office in Bentong, he saw that it was operating as usual.

The tunneling project at the site was still under construction, and the progress could be said to be smooth and fast.

However, the employees refused to comment.

A Chinese-national staff who was cleaning the mud on the road even asked the media personnel to leave, telling them off for taking photos. He warned them for trespassing, stressing that outsiders were not allowed to enter the construction site.

At another site, the administrative staff of CCCC were also seen reporting for work as usual.

It was said that many of the Chinese employees in the office were reluctant to respond to the suspension of the ECRL project, saying that all the high-level staff were in KL for a meeting. 

When work on the multibillion ringgit ECRL project was suspended, the CCCC had responded promptly with a strong statement expressing its disappointment on the move and warning that the cost of the ECRL construction could rise due to the suspension.

“We respect and comply with Malaysian laws. Under the situation, we have no choice but to adhere to the suspension instruction.

“While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension.

“We are upset and concerned about the livelihood of our 2,250 local staff, as well as several sub-contractors, suppliers and consultancy firms,” stated the company.

Earlier on April 19 , CCCC said in a briefing session with the local Chinese community groups that the ECRL project will create more than 80,000 jobs locally. The operation period will create more than 6,000 jobs.

Li Cong, executive deputy manager of the CCCC branch office in Bentong also told former Transport Minister Datuk Seri Liow Tiong Lai and representatives of Chinese groups that more than half of its 126 employees are Bentong locals.

A job recruitment drive was held in April in Bentong, attracting more than 200 young people. 

In addition, through the “China-Malaysia Railway Talent Training Cooperation Programme”, CCCC has trained 3,600 railway construction and operation workers for Malaysia. They were supposed to be given priority to join the ECRL project. Since September 2017, over 446 employees have been trained. They had planned to train 630 people in 2018.

The suspension of the ECRL project is sure to have a huge impact on the relevant units and contractors. — Sin Chew Daily/Asia News Network