The Straits Times - Malaysia's MRT Corp requires bidders to seek financing partner in new tender

the straits times

KUALA LUMPUR - The third phase of Malaysia's MRT, which is now open for tender via a turnkey contractor, would rely on bidders to seek a financial institution to fund its construction.

Called MRT Line 3 or the Circle Line, the project will add to the stations and tracks of the MRT Line 1 and Line 2 in the Klang Valley that encompasses Kuala Lumpur and its surrounding districts.

In clarifying the financing option for interested bidders, MRT Corp told the Straits Times that the eight-year moratorium set in the tender refers to a postponement of payment from the government to the financial institution providing the loan.

"The contractor is set with a task to find a financial institution that is able to meet the requirement to finance the MRT Circle Line," the company told Straits Times via email.

The tender for Line 3 departs from the MRT Line 1 and 2 projects.

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Previously, MRT Corp had appointed a "project delivery partner" who then awarded subcontracts and oversaw the construction.

MRT Corp is now seeking a turnkey contractor who would be responsible for the construction of the project. But the bidders need to also secure a financial partner able to meet the requirements, as opposed to immediate government funding.

The criteria set by MRT Corp, an entity under the Finance Ministry, requires the financial institution to allow repayment spread over 30 years, after a minimum moratorium of eight years.

The financial institution would also need to come out with at least 90 per cent of the initial project cost.

The financing can be done in Malaysian ringgit, US dollar, Chinese renminbi, Japanese yen and the euro.

Analysts have projected the cost of MRT Line 3 to be between RM30 billion to 40 billion (S$9.8 billion to S$13 billion).

Line 1 and 2 was financed via a finance-ministry owned enterprise, DanaInfra Nasional.

DanaInfra has RM20.7 billion of government-guaranteed debts in 2015, most of it attributed to funding the MRT. That sum spiked by almost RM9 billion or 43.4 per cent increase in 2016.