This article first appeared in The Edge Malaysia Weekly on September 11, 2023 - September 17, 2023

THE federal government is not shelving the Mass Rapid Transit 3 (MRT3) project, even though it is funding the maiden Light Rapid Transit (LRT) project in Penang at the same time, Minister of Transport Anthony Loke tells The Edge.

“I don’t foresee Penang LRT being at the expense of MRT3. The prime minister is committed to both projects. We hope the two projects will take off together,” says Loke when asked to comment on speculation that the federal government might not proceed with the third MRT line in the Klang Valley in order to conserve fiscal resources for the LRT in Penang, a project that was mooted nearly a decade ago.

MRT3 is one infrastructure project that construction players have been looking forward to, given its size. Investment analysts expect the mega rail project to be a fresh growth catalyst for the local construction industry after the completion of MRT2.

Loke, who was appointed transport minister for the second time under the unity government, does not think the government will come under fiscal constraints should it undertake the two public rail projects simultaneously.

“For MRT3, as you know, (all) MRT ­(projects) have always been off-budget. They have never been part of the national budget. The expenditures on MRT projects are not reflected in the national budget. It does not fall under DE (development expenditure) through MRT Corp.

“(As for) Penang LRT, we are looking at various options, depending on approval from MoF (the Ministry of Finance),” he adds.

Separately, The Edge has learnt that MRT Corp has notified companies that the validity period for their job tenders in relation to MRT3 has been extended. The tender bond has been extended by three months from Sept 30 to the end of the year. Bidders have been told they need to submit certain required documents for the extension of the validity period.

In the revised Budget 2023 tabled in February, Prime Minister Datuk Seri Anwar Ibrahim — who is also finance minister — said the government intends to review the cost of the MRT3 project in the hope of reducing the total amount to below RM45 billion.

“Regarding the MRT3 project, the cost was originally estimated at RM68 billion in 2018. Last year, the project procurement process started and the cost was estimated at RM50 billion.

“The government will now review details of the project to ensure the best value for money and is confident of achieving additional savings to bring the total cost to under RM45 billion. This effort is in line with governance reforms to reduce procurement costs to achieve savings that can be redistributed for the benefit of the rakyat,” said Anwar in the budget speech.

MRT3 — also known as the Circle Line — will be the final piece of the Klang Valley Mass Rapid Transit (KVMRT) network that will link the various lines of mass and light rail transits within the national conurbation to form a complete network.

According to project owner and developer MRT Corp, MRT3’s alignment will run along the perimeter of the city of Kuala Lumpur. It will be connected to existing MRT, LRT, KTM Komuter and KL Monorail lines through 10 interchange stations.

MRT Corp first issued a notice of tender for the turnkey contractor role of MRT3 back in November 2017. Based on the notice, MRT3’s scope includes 40km of railway, where 32km would be underground through twin-bored tunnels and 8km would be elevated viaducts.

The permanent works shall be designed to permit the railway to operate at a maximum operating speed of 100kph with an operationally proven Grade of Automation — Level 4 signalling systems for driverless urban metro systems.

It would have 26 stations, with 19 being underground and seven elevated, and two depots.

However, the change in government in May 2018 led to the project being shelved as the Pakatan Harapan (PH) administration then focused on fiscal consolidation by cutting public spending and government debts.

The project was then revived by the Perikatan Nasional (PN) government in April 2021, which held a request for information briefing for elevated civil works and stations in connection with MRT3. In May 2022, MRT Corp started the tender exercise for three work packages for the Circle Line.

Under the new scheme, MRT3 will be 51km long, with 40km elevated and 11km underground. It will have 31 stations, 10 of which will be interchange stations. Besides the extension of the length of the line, the ratio of underground:elevated portions is also different from the first iteration in 2017.

The government then undertook a unique proposition, where successful contractors would have to finance the initial two years of construction works worth at least 10% of contract value, and provide a minimum moratorium period of two years to MRT Corp.

The first MRT line in Malaysia (MRT Line 1), MRT Kajang Line — previously known as the Sungai Buloh-Kajang line — was completed in 2016 at a cost of RM21 billion. It traverses Sungai Buloh in the west to Kajang in the east of the Klang Valley, for a total length of 51km.

Meanwhile, the MRT Putrajaya Line, or MRT2, was completed early this year at a cost of RM30.53 billion. This line is 57.7km long and connects the communities between Putrajaya, Serdang and Sungai Buloh.

Following the change in government in November 2022, the finalised alignment has yet to be announced.

While construction firms are longing for the MRT3 project to start, the federal government announced in May that it would allocate funding to expedite the LRT project in Penang.

Since then, MRT Corp has taken over the state’s LRT project following the federal government’s decision to fund it in exchange for the state government reducing the scope of its Penang South Islands (PSI) reclamation project.

MRT Corp will conduct a feasibility study on building an underground line for the state’s LRT in the city centre and an undersea line connecting Seberang Perai to the island. On Aug 21, MRT Corp issued a notice of request for proposal for the design consultancy services of the Penang LRT.

The Penang LRT is planned to traverse between Penang International Airport in Bayan Lepas to Komtar in George Town and onwards to Tanjung Bungah. The next phase of the line will see the construction of a cross-channel link to Butterworth and onwards to Kepala Batas and Simpang Ampat on the mainland. Another spur line to Air Itam from Komtar is also under consideration.

The first phase was estimated to cost RM10 billion when it was part of the Penang Transport Master Plan, which was to be funded by the sale of the land reclaimed under the PSI. However, as the line seems to have been extended to Tanjung Bungah, the cost is likely to be higher.

Construction costs for the Penang LRT could also increase, now that there are considerations for the line to be underground as it gets to the historic parts of George Town, a World Heritage Site.

According to Loke, the government is exploring various funding options to fund the Penang LRT. One of these is for some of the public transport projects to be parked under the development expenditure (DE) allocated to the Ministry of Transport.

“Because under DE, some of our current commitments are almost completed. The major DE is the Gemas-Johor Bahru double track project. That has been going on for many years and should be completed by 2025. So, after 2025, we will not have any expenditure on the Gemas-JB project.

“The other big commitment right now is phase two of the Klang Valley Double Track as there are a few more years to go. But with the completion of Gemas-JB, we have some room in terms of DE, for other items,” he explains.

Furthermore, says Loke, the ongoing Johor-Singapore Rail Transit System is also reaching the tail end of construction work, which will be completed within the next two to three years. 

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