What’s MRT3 For?

To overcome traffic congestion and unbearable commute we have the public transport system in the form of rail services in the Klang Valley.

The key rail lines include the Light Rail Transit Ampang Line (LRT1), LRT Kelana Jaya Line (LRT2), the KL Monorail, the KTM Komuter line, the Mass Rapid Transit Kajang Line (MRT1) and Phase 1 of the Mass Rapid Transit Putrajaya Line (MRT2).

However, these lines are not achieving their desired ridership. Based on the latest data, the ridership of the three main lines – LRT1, LRT2 and MRT1 – is shown in the chart above. Between the period from the second quarter of 2020 (2Q20) and right up to early 3Q21, the nation’s capital was basically in lockdown and fewer commuter movements were seen. From the peak daily ridership of almost 650,000 in 4Q19 for all three lines combined, ridership fell to a low of just under 106,000 in 3Q21. As the economy opened, ridership improved and in 3Q22, ridership more than tripled to about 466,000 per day for the three lines. This is still well below the peak ridership as the recent 3Q22 was just 72% of the daily ridership seen in 4Q19.

There have been comments made by some that the public transportation system has been shunned by commuters due to fears of the Covid-19 spread, as most of our public transport system can be overwhelming at peak hours and the likelihood of close contact is indeed higher. Hence, it has been argued that the public felt more comfortable driving their vehicles to commute and that has also driven the demand for used and new cars.

With petrol subsidised to the tune of more than RM1 per litre, the relatively cheap petrol does not help the situation either, as commuters do not feel the pain of higher transportation costs to the extent they switch to public transportation. However, this may change soon as the newly formed government is looking at various issues, including targeted subsidies.

As we are aware, if fuel prices are increased in line with the actual retail price, there could be some spill-over effect, as commuters may switch to public transport, purely based on cost savings. The Greater Kuala Lumpur (GKL) public transportation system achieved a new milestone as Phase 1 of the MRT2 line was opened in mid-June 2022.

Connecting Kwasa Damansara to Kampong Batu, Phase 1 covers a distance of 17.5km involving 12 stops. The entire MRT2 line, covering a distance of 57.7km, is expected to be ready next month and this will add another 40.2km involving 24 more stations as well as potentially four provisional stations. Early data for the first two weeks of operations showed that ridership for the new line was under 25,000 per day, while in 3Q22, ridership fell to just over 20,000 per day.

According to Mass Rapid Transit Corp Bhd (MRT Corp), the MRT2 construction cost was approximately RM30.5bil, translating to RM529mil/km. In comparison, MRT1, which connects Sungai Buloh to Kajang with a total distance of 46km and with 31 stations, cost RM21bil or RM457mil/km.

We now wish to implement a new Circle Line or MRT3. This line is expected to cover a distance of 51km with another 31 stations. At a construction cost of RM31bil or RM608mil/km, the MRT3 will be the most expensive line to be built. Inclusive of other costs, including the land acquisition cost of RM8bil, the cost per km is expected at RM1bil/km. 

MRT Corp reported a net loss of RM3.67bil in 2021. To date, MRT Corp has accumulated losses to the tune of RM56.66bil, and this was financed by the government’s contribution amounting to RM57.26bil.

The impairment losses are arrived at by writing off whatever investment was made to build the MRT1 and MRT2 lines. Up to the end of December 2021, based on MRT Corp’s financial statements, the rail company has completely written off in its books the RM24.81bil spent on the MRT1 line and RM31.25bil spent on the MRT2 line. MRT Corp’s revenue in 2021 was just RM32.3mil, which was not enough to cover the operational cost of RM67.3mil.

Rail investment and returns are very long-term and may make no good sense for a PFI. For true private sector involvement, it will be in operations of the rail. The model could follow the earlier HSR model with Government as asset-owner and the private sector as operator. The idea is to have a fare box ratio on 1 or above. In this context, shouldn’t we review and defer MRT3?

Reference:

Don’t miss the bus, Pankaj C. Kumar, The Star, 24 Dec 2022