Why Are We Doing MRT3?

 The Ministry of Finance (MOF) has committed up to RM50 billion (or roughly RM1 billion per km) in financing for the Mass Rapid Transit 3 (MRT3) Circle Line project. The initial construction cost estimated was at RM31 billion plus RM8 billion for land acquisitions.

The MOF will issue government-guaranteed Islamic bonds to raise the required funds for the massive rail project. The extra RM11 billion is to be set aside as contingency.

The construction cost of RM31 billion, is similar to the cost of MRT2, which is expected to commence operation in the next quarter. In comparison, the first MRT1 Sungai Buloh-Kajang Line cost RM21 billion while the second MRT2 Sungai Buloh-Serdang- Putrajaya Line also cost RM31 billion, according to MRT Corp’s official numbers.

The tender for the construction works on MRT3 Circle Line project will be opened in May.

The jobs will be awarded in the fourth quarter of 2022.

The construction activities will be monitored directly by MRT Corp as the project developer and it will be assisted by a project management consultant (PMC).

The MRT3 Circle Line is scheduled to be fully operational by 2030 with the first phase’s completion expected to conclude in 2028, subject to land acquisition process.

The third MRT line will have a circular alignment running along the perimeter of Kuala Lumpur City with about 51 kilometres (km) in length, split between 40km of elevated tracks and 11km of underground tunnels, according to MRT Corp.

The current proposed alignment of MRT3 Circle Line will have 31 stations, 10 of them serving as interchange stations with the eight existing rail lines in the Klang Valley.

Contractors are expected to also shoulder the responsibilities of funding the project whenever there is shortage of funds from the MOF.

The hybrid funding model, including the issuance of sukuk, is to keep MRT Corp’s financing

options open, adding that the MOF will finalise the details of the issuance of the green sukuk under the Securities Commission Malaysia’s Sustainable & Responsible Investment Sukuk framework.

A spokesperson from MRT Corp pointed out that the proposed hybrid funding model will see a public-private partnership with contractors of the project contributing to the upfront construction cost and receive deferred payments as the project progresses.

What is the urgency of this project? Why do we need a Circle Line? Is it to assist some “valued” contractors? We have no money to pay the B40 or M40 who need RM10,000 and we allow withdrawals from EPF? Isn’t this a contradiction, Zafrul? Will Zafrul resign, since he could not accept any further withdrawals from EPF? But please, don’t hold your breath! In Malaysia, nobody resigns, even convicts can go campaigning freely.

To be financially feasible, i.e. Fare box ratio of 1, ridership numbers must exceed one million passengers per day (with an average fare of say, RM10 per passenger per direction) – a rough estimate. This excludes repayment, which may suggest a much higher ridership or other income stream to meet annual debt obligation. When is this feasible? Probably in a 100 years’ time – 2130. By then, new technologies will arise – tele-transportation. So, why do this?

Reference:

MOF to raise up to RM50 billion for MRT3: tender to be called in May, Seah Eu Hen and Shazni Ong, theedgemarkets.com, March 16, 2022