LRT3 contract revised to RM11.86b for MRCB-George Kent JV

PETALING JAYA: MRCB George Kent Sdn Bhd (MRCB-GK), a consortium of Malaysian Resources Corp Bhd (MRCB) and George Kent () Bhd, has received the letter of appointment (LOA) for the construction of the LRT3 project from Bandar Utama to Johan Setia, of which the contract is now fixed at RM11.86 billion.

The contract sum of the project includes a contingency/provisional sum of RM400 million, which, if not utilised, will reduce the contract sum.

MRCB-GK today received the LOA from Prasarana Malaysia Bhd.

The salient terms of the LOA, amongst others, include the date of completion, which will be Feb 28, 2024, unless extended in accordance with the contract. MRCB-GK will provide a performance for the equivalent amount of 5% of the contract sum, within 30 days from the date of the LOA; and MRCB and George Kent are to provide a proportionate corporate guarantee to Prasarana.

“Negotiations on the fixed price contract will continue so that the contract will be executed no later than Dec 12, 2018,” MRCB and George Kent said.

Last month, the government agreed for the project to continue at a total cost of RM16.60 billion under a fixed price contract regime. The RM16.6 billion includes land acquisition costs, interest payments during construction and other costs while the implementation concept will be remodeled from a project delivery partner (PDP) to a fixed price contract.

To recap, George Kent and MRCB were appointed the PDP of LRT3 on Sept 4, 2015 at an approved construction budget of RM9 billion.

In March, Prasarana requested an additional RM22 billion in government guarantee to ensure funding for the construction and completion of LRT3. This was on top of a RM10 billion bond facility guaranteed by the government in 2015.

However, in July, the Finance Ministry said it would not support additional funding for the 37km project unless Prasarana cut the cost of the project, which was estimated to rise to as high as RM31.45 billion.

MRCB and George Kent said the project will not have any significant effect on the earnings and net assets of the MRCB and George Kent groups for the ending Dec 21, 2018 and Jan 31, 2019 respectively. However, it is expected to contribute positively to the future earnings of MRCB and George Kent groups.

“The project is subject to normal business risks such as an increase in costs due to any escalation of material costs and contractual terms including default provisions. As such, the management will put in place control measures and operational procedures to reduce the impact or likelihood of such events,” MRCB and George Kent said.

Source: The Sun Daily

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