The Treasury-General Tan Sri Dr Irwan Serigar Abdullah had informed the media two days ago that Malaysia and China will sign the Framework Financing Agreement and Engineering, Procurement, Construction (EPC) Contract for the project yesterday.
Dr Irwan spoke to Malaysian media upon arrival in Beijing on Monday as part of the delegation accompanying Prime Minister Najib Razak who is on a six-day visit to the Chinese capital.
He said the railway link will lower transportation costs between the west and east coasts of peninsular Malaysia, bring down prices of goods and reduce travelling time. "It will also will help create more jobs and business opportunities for Malaysians, especially the rural folks," Dr Irwan said.
Malaysians are not disputing or objecting to the ECRL project or its benefits to the nation.
Malaysians are stunned that such a mega-project is being awarded without any form of transparency and competitive tender to ensure that we receive the best value for money.
Worse, the project was originally touted to cost RM30 billion, as opposed to a monstrous RM55 billion as announced in the Finance Minister’s budget speech.
As a measure of comparison, the 329km Ipoh-Padang Besar double-tracking project was awarded to MMC-Gamuda consortium for RM14.5 billion in 2003. More recently in December 2015, the 179km Gemas-Johor Bahru link was awarded to China Railway Engineering Corporation for the sum of RM7.1 billion. On average, the railway projects cost RM44.0 million and RM39.8 million per kilometre respectively.
However, at the cost of RM55 billion, the 600km ECRL will cost a monstrous RM91.7 billion per kilometre to construct. That would mean that the ECRL will cost 108% and 130% more than northern and southern double-tracking projects respectively!
Tan Sri Dr Irwan Serigar tried to preempt questions on the project by claiming that the financing offered by China was a lower rate compared to the international market, coupled with a long repayment period of 20 years.
A favourable financing rate is not a justifiable excuse not to carry out a proper tender exercise. Based on the above information we have, a financing rate that is say, 2% lower than other parties would never justify a 130% increase in the cost of the project!
If Dato’ Seri Najib Razak or Tan Sri Irwan Serigar think it is, then they should be sacked as the Finance Minister and Treasury-General respectively as they have obviously failed their mathematics in primary school.
Malaysians fear that the real reason why the ECRL project is awarded to China at grossly inflated prices is to hide future illegal money flows from the opaque Chinese companies to 1MDB creditors such as International Petroleum Investment Corporation (IPIC) to rescue the state-owned fund. IPIC, in this case, is suing 1MDB for a massive US$6.5 billion.
As exposed by the Sarawak Report earlier in July, we fear that the “excess” from the inflated Chinese contract will be siphoned in a prearranged but illegal manner to bailout 1MDB.