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Awaiting a final decision on ECRL

  • Lim Guan Eng and Azmin Ali have been telling their own versions of the story, both claiming that the cabinet has made a decision.

Sin Chew Daily

Is the East Coast Rail Link (ECRL) project cancelled, or is there still any chance for its revival?

In recent days finance minister Lim Guan Eng and economic affairs minister Azmin Ali have been telling their own versions of the story.

Lim said PM Mahathir had made a decision in the cabinet meeting and that probably Azmin had not been notified of the decision. He also said he would take the next course of action following the PM's instruction.

Meanwhile, Azmin said the government had decided in a cabinet meeting to cancel the project as the government had to settle RM500 million in loan interests every year.

Both minsters said the cabinet had made a decision, and Azmin's aide confirmed that he indeed did attend the cabinet meeting.

So, we may have to wait for PM Mahathir himself to enlighten us on ECRL's fate.

As the project has very broad implications, it is imperative that the case be handled cautiously.

The ECRL project decided by the previous BN administration's SPAD under the transport ministry in 2006, was put on hold by the Mahathir-led Pakatan Harapan administration following the collapse of the BN government post-GE14, citing the project's economic viability and the massive national debt incurred.

This was soon followed by a host of problems relating to the non-compliance and compensation issues involving large and small contractors as well as thousands of local and foreign personnel.

Given the enormous amounts of money and broad implications involved, the government cannot cannot afford to have a clean cut of the whole project, while the Chinese and Malaysian authorities have found themselves in a tug-of-war over whether to carry on or not to carry on with the project. Along the way there have been proposals of exit solutions such as re-estimation of construction cost, amounts involved in breach of contract and repayment of invested capital, among others.

Last October, Lim Guan Eng said Malaysia Rail Link Sdn Bhd (MRL) had paid China RM19.68 billion for the construction of ECRL, including RM10.02 billion in advance payment and RM9.68 billion in progressive payment. He said we could get back the advance payment of RM10.02 billion if the project were to be cancelled eventually.

Former PM Najib subsequently claimed that the ECRL project was funded by a 20-year loan from the Exim Bank of China, which had disbursed the loan amount to China Communications Construction Company (CCCC), and that Malaysia had to pay RM9.6 billion of disbursed loan if the project were to be cancelled.

PM Mahathir proposed a solution in early January, i.e. shrinking the project scale in a bid to reduce the cost. Such a move will exempt the Malaysian government from paying billions of ringgit in compensation while the Chinese company will not get to suffer financial loss and the good relationship between the two countries will not be jeopardized.

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