ECRL price tag of RM55b not as inflated — MRL Infra chief

KUALA LUMPUR (Oct 5): The RM55 billion price tag for the construction of the East Coast Railway Link is not as hefty or inflated as some may argue, said Malaysia Rail Link Sdn Bhd (MRL) Infra Director Nor Rizan Mohd Akhir.

"I have heard many noises about the cost comparison for ECRL. It is very different. First is the technical detail such as standard gauge and loading, which is different from other rail projects," Nor Rizan told some 400 participants attending the Affin Hwang Capital Conference Series 2017 here today.

"Second is that the cost for ECRL includes the rolling stock and wagons, and the ECRL is targeting 70% of its capacity to be used for freight services, and the remaining 30% capacity will be used for passenger services," he said.

Thirdly, Nor Rizan said the purportedly high cost is due to different terrain and geotechnical structures, which will require the ECRL to boast more tunnels and elevated structures along some of the alignment.

"There are more tunnels and elevation in the ECRL as compared to other rail lines, due to land structure challenges. And obviously the cost to build the railway in this kind of terrain will not be cheap," he reasoned.

Currently, Nor Rizan said MRL — a company owned by the Ministry of Finance and owner of the ECRL project — is in the midst of completing land acquisition and finishing the rail alignment, with the aim to maximise the capacity of the nearby ports such as in Kuantan, Pahang and Kemaman, Terengganu.

"The land acquisition cost is not as high as per what you mentioned (RM20 billion). Where we are seeing the challenge is taking over the land on which buildings of worship are erected," he added, declining to elaborate on the ECRL's internal rate of return.

"The question of return is a hard one. No rail projects in the world are profitable, except maybe in Hong Kong and Tokyo, Japan," he said.

"We are talking about tangible and non-tangible benefits that can be offered, and recouping the investment would be via fare-box and non-fare box collection," he added.

As for the RM55 billion loan, which is offered by the Export-Import Bank of China Ltd, Nor Rizan said it comes at an attractive price.

"Certainly there is no question of Malaysia losing its sovereignty by taking this loan. So far two drawdowns have been made and that is as far as I can divulge," he added.

Going forward, Nor Rizan said MRL expects the construction of the mammoth highway linking Kelantan and Selangor to begin within the first quarter of next year.

According to the MRL website, the ECRL spans some 600.3km, cutting through four states: Selangor, Pahang, Terengganu and Kelantan. — theedgemarkets.com

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