Monday, November 07, 2016

Does Transport Minister Datuk Seri Liow Tiong Lai really know what he is talking about when he said the East Coast Rail Link (ECRL) doesn’t cost RM55 billion?

The Edge Financial Weekly quoted an executive from a construction outfit who said that at RM55 billion, the East Coast Rail Link (ECRL) “could be the most expensive rail infrastructure project in the world in its class... it’s a good project but not at this ridiculous price.”

The Edge cited the examples of the 215km Padma rail line in Bangladesh and 120km Mombasa rail link in Kenya which were being constructed by China Rail Construction Corp for RM68.1 million and RM61.4 million per kilometer respectively.

For another project in Ethiopia awarded to Turkish contractor, Yapi Merkezi, the 375km Awash-Weldia railway line of which more than 40% is built on challenging terrain, the cost was only US$1.7 billion or RM18.1 million per kilometer.

The question hence arises as to why is the Malaysian government awarding the 600km ECRL project to China Communications Construction Company (CCCC) at RM55 billion or RM91.7 million per kilometer without any open competitive tender exercise?

The Minister of Transport, Datuk Seri Liow Tiong Lai tried to allay the concerns of the Malaysian public by claiming that the RM55 billion is not the cost of construction.  Instead he claims that it is merely the value of the Financing Framework Agreement.

We have no idea whether the Transport Minister knows what he is talking about or whether he has even seen or read the above agreements given that his Deputy told the Parliament that he could not answer ECRL queries because it was not under the purview of the Transport Ministry but is instead under the Prime Minister’s Department control.

The question hence arises as to whether Datuk Seri Liow, who is also the MCA President is merely shooting off his hip, especially since the Prime Minister himself disclosed during his Budget 2017 address that “the 600-km rail will connect townships such as Port Klang, ITT Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu and ends in Tumpat, with an estimated cost of RM55 billion.”

Datuk Seri Liow even assured Malaysians that the construction cost of the ECRL was “very transparent” and that industry players were well aware of the cost per kilometre of the rail that would be laid.  If so, then why didn’t he reveal the “real” cost of the project then?

Even if Datuk Seri Liow does indeed know better than his Prime Minister, his response further begs the question as to why should Malaysia borrow RM55 billion if the cost of the rail project is significantly less?

Malaysians fear a repeat of the multi-billion dollar 1MDB scandal where the state-owned company borrowed US$3.5 billion and RM6.8 billion, or approximately RM18.3 billion (at the then exchange rate of US$1:RM3.30) to acquire Tanjong Power and Genting Sanyen power plants for RM10.8 billion.

As we know today, the balance of the proceeds from the borrowings, US$1.367 billion were siphoned to a fictitious British Virgin Island incorporated Aabar Investment PJS Limited under the guise of a “collateral” to secure the bond guaranteed by Abu Dhabi’s International Petroleum Investment Corporation (IPIC). Of the misappropriated amount, the United States Department of Justice has alleged that US$30 million was transferred to Dato’ Seri Najib Razak’s personal bank account in Ambank while another US$238 million went to his stepson, Riza Aziz’s company in the United States, Red Granite.

The East Coast Economic Region (ECER) Development Council CEO, Datuk Jebasingam Issac John has previously been quoted by news reports in April 2014 that the ECRL will cost approximately RM30 billion.  If the figure cited is indeed true and is the same figure Datuk Seri Liow is referring to, perhaps the Transport Minister should enlighten Malaysians as to where the balance of RM25 billion to be borrowed from China’s Exim Bank for the ECRL project will go to.

Can Datuk Seri Liow or any other Cabinet Minister guarantee Malaysians that the excess borrowings will not be misappropriated, perhaps even to bailout of 1MDB debts which were stolen?  Is the Malaysian Government digging a bigger hole for itself in order to cover up the previous holes?
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