Its minister, Lim Guan Eng, said the decision was made after the final round of negotiations which led to MMC-Gamuda further reducing the cost by RM3.6 billion.

“This means the construction cost (excluding interest during construction, land acquisition costs and other costs) of MRT2 has been successfully reduced by RM8.82 billion, or 22.4%, from RM39.35 billion to RM30.53 billion,” he said in a statement here today.

MMC-Gamuda had previously agreed to cut the cost of the above-ground works by RM5.22 billion, which was accepted by MoF.

However, its offer to reduce underground work cost by only RM2.13 billion was rejected by MoF and the decision was made for the contract to be terminated and re-tendered.

Today, the Cabinet agreed to MMC-Gamuda’s new offer and the cost rationalisation exercise.

Lim said all above-ground stations would continue to be built as planned earlier, while the two underground stations — Bandar Malaysia (North) and Bandar Malaysia (South) — would be postponed, bringing the total number of stations from the original 35 to 33.

Putrajaya had earlier this month terminated MMC-Gamuda’s RM16.71 billion underground contract after they failed to agree on the cost for the underground works. The government also decided to re-tender the remaining works.

Lim said the government is committed to getting value for money for all its expenditures, especially when the projects involved a large amount of debt.

“The final cost savings of RM8.82 billion for the MRT2 project will reduce fares that need to be paid by MRT users, which would inadvertently increase usage of public transportation in the Klang Valley,” he added.