Lim said the federal government and MMC-Gamuda failed to reach an agreement regarding the underground portion of the construction project. — Picture by Yusof Mat Isa

KUALA LUMPUR, Oct 7 — Putrajaya succeeded in saving over RM5 billion in its MRT2 rationalisation exercise and hopes to reduce further costs as it opens up tender for the underground portion of the mass rail transport project, Lim Guan Eng said today.

The finance minister said the Cabinet accepted an offer from turnkey contractor, consortium MMC-Gamuda, on October 3 to complete the above-ground portion of the MRT2 project at the reduced cost of RM17.42 billion.

“This is a RM5.22 billion or 23 per cent savings achieved through a reduction in cost and rationalisation in work scope without cancelling any of the above ground stations,” he said in a statement.

The original cost of the above-ground portion was RM22.64 billion.

However, Lim said the federal government and MMC-Gamuda failed to reach an agreement regarding the underground portion of the construction project.

“As a result, the Cabinet has decided to terminate the underground contract. All unfinished underground work will be retendered out through an international open tender process,” he said.

He added that the decision was made as the government believes it can make bigger savings through the open tender process compared to what the existing contractor can provide.

“The billions of ringgit saved will reduce debt and interest the Federal Government would need to repay, which ultimately, would be borne by the rakyat through future taxes.

“Furthermore, the expected cost reduction for the MRT2 project will cut the fares future rail passengers will have to pay, and boost public transport usage in the Klang Valley,” he added.

The MRT2 project approved by the Cabinet on February 26, 2014, originally cost RM28 billion but more than doubled to RM56.93 billion due to the line extension to Bandar Malaysia, the ringgit slide and other factors.

* A previous version of this story contained a type error which has since been corrected.