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Thursday March 7, 2013

Major rail projects decisions in H2 given the general election slated for H1

By CHERYL POO
cherylpoo@thestar.com.my


KUALA LUMPUR: Despite limited details, a meeting between the Land Public Transport Commission (SPAD) and CIMB Research has reinforced the view that the second half of 2013 would be a better period to reconsider major rail projects, given the general election (GE) slated for the first half of the year.

A CIMB Research report stated that the RM30bil cost estimate for the high-speed rail (HSR) project between Kuala Lumpur and Singapore would be a bonus for the sector on top of the two new Klang Valley mass rapid transit (MRT) lines.

The meeting with SPAD's Policy, Planning and Research Division head Dr Prodyut Dutt covered the overall transport master plan, but focused more on the status of the KL-Singapore HSR and remaining MRT lines, although CIMB came away with limited details.

The RM30bil widely reported cost estimate of the HSR was still questionable, pending a decision on the rail's final alignment and the total number of stops, the report said.

The alignments are likely to cover a major part of the western corridor of Peninsular Malaysia but will not likely adopt the Maglev technology, as this would be costlier.

CIMB reported that the timeline for the detailed design and tender phase would be 1 years from now, and that specifications for the HSR might be similar to the US$18bil (RM54bil) Taiwan-Kaohsiung HSR (THSR), which has been operating since 2005.

The THSR, which runs 345km south of Taiwan, 61km of which is underground, had taken more than five years from the point of award to completion. Tickets are cheaper than airline tickets, which may explain why daily passengers had surged from 40,000 in 2005 to 121,000 by 2012.

For the Klang Valley MRT, the next MRT line is likely to be a circle line. Plans for this may take off by year-end.

“We were not surprised by SPAD's estimate of 1 years before both the KL-Singapore HSR and new MRT line reach their tender and award phases,” CIMB opined.

Although feasibility studies have been completed, approval of alignments and the Cabinet's go-ahead have yet to be secured, with project structures yet to be finalised.

The MRT Sungai Buloh-Kajang line took six to nine months from the point of project launch to contract awards, it noted.

Timelines aside, the construction of the HSR and the remaining MRT lines will definitely draw the interest of contractors.

Although CIMB remains positive that the planning stage for new rail jobs has picked up pace, it forecasts that further progress before the GE would be unlikely.

Details of the feasibility studies, alignments and project structures will likely be unveiled only in the second half of this year.

Feasibility studies for the HSR, it pointed out, had been completed, but the project still needed more detailed evaluation before a possible project structure could be firmed up.

SPAD observed that it may be too costly for the HSR project to be fully funded by the private sector. Also, it would be too early to speculate on the project structure.

CIMB suggests that an option would be to emulate the Klang Valley MRT, which is managed by MRT Corp, the special-purpose vehicle that oversees the execution, award and procurement of MRT lines in Malaysia.

“We think an award is likely by mid-2014,” the report added, tying in with Dutt's indicative timeline of between one and 1 years from now before the next MRT project could shift to the award phase.

The recently approved RM800mil capital expenditure to revamp and modernise Keretapi Tanah Melayu Bhd, meanwhile, will likely be executed by the Transport Ministry. The allocation will cover track-renewal work in the Klang Valley, new tracks to divert heavy freight usage and new rolling stock.

Dutt added that under the Eastern Corridor Economic Region's plans, the Government had approved a study for the proposed Kuantan-Kuala Lumpur new rail line to address rail's under-penetration of the eastern corridor of Peninsular Malaysia.

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