PUTRAJAYA (April 15): The government is obliged to pay RM21.78 billion if it decided to terminate the East Coast Rail Link (ECRL) project, Prime Minister Tun Dr Mahathir Mohamad says.
Speaking at a press conference here today, Dr Mahathir said as the original ECRL contract was agreed on a government-to-government (G2G) basis, the Pakatan Harapan (PH) Government, in negotiating an improved deal for the ECRL, had to work within the constraints of the existing agreements.
"The PH Government was faced with the choice to either renegotiate or pay termination costs of about RM21.78 billion, with nothing to show for it. As such, we chose to go back to the negotiation table and call for a more equitable deal, whereby the needs of the Malaysian people would be prioritised," he said.
"After long and protracted negotiations between the Governments of Malaysia and the People's Republic of China, both parties reached a mutually beneficial agreement — the improved ECRL deal.
"As the Federal Government, it is our belief that the ECRL will serve as a stimulus for economic growth and development, especially in East Coast States, regardless of the fact that these States are under Opposition control. This improved project will provide freight and passenger transportation, attract investments along the railway corridor as well as generate significant employment opportunities," he added.
Dr Mahathir said the PH Government's main objection to the original ECRL project was premised on the way and speed at which the original contract was negotiated and signed in 2016.
"It was an unjustified, hefty lump sum price which lacked clarity in terms of technical specifications, price and, by extension, economic justification," he said.
The new supplementary agreement to the engineering, procurement, construction and commissioning (EPCC) contract, which was announced last week, covers Phase 1 and Phase 2 of the ECRL at a reduced cost of RM44 billion.
This is a significant reduction of RM21.5 billion or 32.8%, from its original cost of RM65.5 billion.
Dr Mahathir said the improved ECRL will cost RM68.7 million per km compared to RM95.5 million per km under the original agreement.
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