“Of the 20,000, over 3,000 are made up of MMC-Gamuda JV staff, and of this, more than 60% are Bumiputeras,” it said in a statement, in response to reports yesterday that the finance ministry had terminated the contract after failing to reach an agreement on reducing the costs of the project.
“In addition, the termination will unjustifiably expose MMC-Gamuda to a flood of lawsuits for compensation from terminated employees, sub-contractors, suppliers, manufacturers, and so on, whose contracts will similarly be terminated due to no fault of theirs.”
MMC-Gamuda said it was supportive of the government’s drive to improve the country’s fiscal health and offered a 24% reduction (RM2.3 billion) for the balance 60% uncompleted underground works, achieved through a reduction of the scope of works and specifications.
“It was also achieved by reducing the number of entrances to stations and the number of active stations constructed. From a total number of 10 stations, four will currently be shelved.”
MMC-Gamuda also explained that the two primary factors affecting the costs of underground works were the increased scope of works compared to the MRT Line 1, such as large floor space and a fivefold increase in the underground entrance and pedestrian walkways, among others.
The other key factor is the safety requirement due to the high risk of sinkhole incidents caused by tunnelling through “extreme karstic limestone” in the city centre, including under high-end properties.
It added that if the affected ground collapsed, it could result in “hundreds of millions” in financial losses.
MMC-Gamuda said MRT Corp, the project owner, had introduced strict pre-qualification requirements that could not be relaxed for the insurance industry to insure MRT Corp on the project.
It also pointed out that the finance ministry’s decision was based on the review of the project by a local engineering consulting firm appointed by the ministry.
“A significant part of the review findings were refuted by MMC-Gamuda on technical grounds as being too simplistic and arising from a lack of relevant experience,” it said.
It added that even MRT Corp, which has many experienced technical experts, shared similar views to MMC-Gamuda in their own report of the consulting firm’s proposals.
MMC-Gamuda said they had on three occasions urged the finance ministry to appoint an international engineering consulting firm with the relevant experience to carry out an objective review looking into all reasonable engineering and technical requirements.
It also said that the finance ministry has yet to convey to MMC-Gamuda an acceptable reduction figure for the project and that if they knew this figure, both parties would be in a better position to relook how the savings could be achieved.
“The appointment of an international engineering consulting firm as proposed by MMC-Gamuda would greatly facilitate this exercise,” it said, adding it was open to further discussions with the finance ministry.
“MMC-Gamuda believes that the finance ministry’s aim of achieving savings is best done by both parties reaching an acceptable compromise instead of terminating the contract and re-tendering the remainder of the underground works.”
Yesterday, after announcing the termination of MMC-Gamuda’s contract, Finance Minister Lim Guan Eng said all unfinished underground work would be re-tendered via an international open tender process.