The report said the tender for the third phase of Malaysia’s MRT system had surprised industry analysts as the government was asking bidders to provide 90% upfront financing for the project.
Other conditions include one requiring bidders to have handled urban projects costing RM10 billion in the past decade. Also, the winning bidder will receive payment eight years later, with the payment spread out over 30 years.
According to the report, some critics see this as being designed to allow China’s deep-pocket government-linked contractors to win.
Industry analysts, it said, had, in research notes, raised doubts that the financing proposal would attract local bidders.
Nomura, for instance, had said the “huge financing commitment likely rules out any Malaysian contractor being the lead contractor due to relative balance sheet risks”.
MRT Corp admitted to the ST that it was keen in attracting overseas bidders.
“The proposed project structure for MRT Line 3 involving a turnkey contractor which also has the responsibility of securing the financing for the project is aimed at attracting foreign companies who may provide better financing for the Circle Line,” MRT Corp told the ST.
MRT Line 3 is also called the Circle Line as it will encircle Kuala Lumpur.
However, MRT Corp’s chief executive officer Shahril Mokhtar said the tender exercise would not sideline Malaysian firms, as they could form a consortium with local or foreign partners.
Opposition politicians have raised questions about the manner in which the exercise is being done, with the MP for Serdang Ong Kian Ming today calling for the tender documents for the MRT Line 3 project to be made public.
The ST report noted that phases 1 and 2 of the MRT project were awarded as regular tenders, with local joint venture firm MMC Corp and Gamuda managing the construction and handing out contracts.
The MRT Line 1 project, which cost RM21 billion has started operations while the MRT Line 2, estimated to cost RM40 billion, is still under construction.
The MRT Line 3 project, on the other hand, will be awarded as a turnkey contract with the winning bidder coming up with the financing, and having the option to give out subcontracts.
The Mass Rapid Transit Corp (MRT Corp) had said it was changing the project model for MRT Line 3 to save billions of ringgit in interest and project costs.
The MRT lines 1 and 2 were funded by DanaInfra Nasional, a finance ministry-owned firm.
DanaInfra had RM20.7 billion of government-guaranteed debts in 2015, most of it to fund the rail project. That sum spiked by almost RM9 billion, or 43.4% last year, the report said.
The ST report predicted that MRT Corp might turn to DanaInfra for funding again if no successful bidder was found for MRT Line 3.