MORE PICS – RM4.6 (or 6.1?) billion 180Km IPOH-RAWANG High Speed Double Rail Link Starts Early Next Year after 6-year Record Delay; A White Elephant?

Started in July 2000 and was scheduled to complete in June 2003 but was delayed due to non payment of cost overrun to initial contractor DRB-Hicom in 2003 and in 2005 re-awarded to UEM World Bhd and is now 99% ready and scheduled to start operation in early 2008 according to the Transport Minister who paid an inspection visit at the Ipoh end. Mitsui & Co Transport Systems is touching up the last part of the contract work as the infrastructure works are fully completed. Initially it was a 2-year, then 4-year and now a 6-year delay.
But what is the cost overrun? According to DAP’s calculations the original RM4.6 billion is now ballooned to RM6.1 billion. (see below)
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Scope of Electrified Double Track Project Between Rawang and Ipoh
This project involves the construction of a new track (179 km) and upgrading of the existing track to allow for a maximum design speed of 160 kph. The other components of the project involved the construction of 41 new concrete railway bridges, culverts, 14 stations, 40 overhead road bridges to eliminate all level crossings, overhead 25kV 50Hz electrification system, modern signalling and communication, Automatic Fare Collection system, land acquisitions and relocation of squatters.
The main objectives are:-
* to extend the existing commuter service from Seremban - Rawang sector to Seremban - Tg. Malim sector with an average number of service of 100 trips a day.

* introduction of a rapid intercity service, between Ipoh – Sentral KL for 16 services a day and ultimately 32 services a day.
* to upgrade existing rail infrastructure for the increase in track capacity for commuter, intercity and freight trains.
The balance of the infrastructure works which were spearheaded by UEM World had been completed on March 2007 and the system works by Mitsui Transportation Systems are expected to complete by end 2007. Testing and commissioning of KTMB’s train service will be conducted intensively to enable commercial operation by early 2008.

First phase of KTM Commuter Services between Rawang and Rasa stretch was officially launched by the Honourable Minister of Transport on 21 April 2007. Upon completion of the whole project by end 2007, KTM Komuter service will be extended up to Tanjung Malim and KTMB will be able to introduce the Rapid Intercity train service from KL Sentral to Ipoh with a journey time of 2½ hours.

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July 06, 2007 21:26 PM
Rawang-Ipoh Double Track Almost Complete

SERDANG, July 6 (Bernama) -- The Rawang-Ipoh double track commuter train project is nearing completion, said Transport Minister Datuk Seri Chan Kong Choy. "It is almost 99 percent completed. I will be making inspections on it next week," he told reporters after launching the Permai Central Transport Hub near here today. The RM4.6-billion project spanning 180km, which will provide Rawang and Ipoh a high speed rail link, would be operational by early next year, he said.

ABOVE & BELOW: The tracks are ready and designed for 160 kph speed and so are 41 new concrete railway bridges, culverts, 14 stations, 40 overhead road bridges to eliminate all level crossings. Only waiting for Mitsui Transportation Systems to complete by year end the installattion, testing and commissioning of the electricals and controls.

Meanwhile, Chan said contractors involved in the Ipoh-Padang Besar double tracking project were working on its cost with the Economic Planning Unit (EPU), Finance Ministry and his ministry.
The 330km-project is expected to resume early next year and due for completion in 2012. It was postponed in 2003 to curtail government spending on mega projects.

ABOVE & BELOW: The Minister arrived in style - in a train

"Once this project is completed, we do not see any problem in operating a commuter train service between Penang and Ipoh," Chan said. On the Sultan Azlan Shah Airport upgrading project, he said a study was still underway to ascertain whether the project will just involve extension of the runway or include the expansion of the airport terminal building.

"My officers are meeting with the EPU and Finance Ministry to follow up on the matter. It might take two to three weeks to come up with the costing for the project," he said.
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Ipoh-Padang Besar rail project to start early 2008

`CONSTRUCTION work on the double-track electrification project from Ipoh to Padang Besar at the border with Thailand is expected to start early next year, Transport Minister Datuk Seri Chan Kong Choy said today.

ABOVE: The big IPOH signage at the newly renovated railway Station (BELOW). Now how many are traveling on a daily basis from Ipoh to Rawang or Ipoh to KL? Traffic increases only at the week-ends and end of the months. So this fast train service (2-1/2 hrs) journey might be a while elephant in the early days in its deployment!. Some might find it cheaper to take a train than to drive. And what would be a reasonable fare compare to the current bus fares?

At present KTM is charging RM8.10 from Rawang to Seremban (appro 80Km). So the 180 km Ipoh to Rawang would be around RM18.00? And Ipoh to KL RM22. 00? This is Double the Current bus fares! Who would then take a train if it is more expensive and not much faster?

However, he said the cost of the project, which would be under the Private Financing Initiative (PFI), was yet to be determined as the Transport and Finance Ministries have not concluded their negotiations with the MMC-Gamuda consortium involved.

ABOVE & BELOW: The Minister's arrival was given VIP treatment

“We expect the work to commence early next year. The Ipoh-Padang Besar project will take five years to complete,” he told reporters after concluding an inspection of the Rawang-Ipoh double tracking railway project by train.

ABOVE & BELOW: after nothing to see except the same double tracks and the station, he was briefed on the stages of construction

The 330-kilometre project north of Ipoh to Padang Besar was awarded to a consortium under MMC Corp and Gamuda Bhd three years ago but it was postponed in 2003 to curtail government spending on mega-projects.

Gamuda and MMC are expected to spend about RM9 billion on the project.— Bernama Jil 12 07

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Govt Mulls Proposal To Takeover KTMB - Chan

KUALA LUMPUR, July 7 (Bernama) -- The government is considering a proposal to revert Keretapi Tanah Melayu Berhad (KTMB) to a public body after 15 years of privatisation, said Transport Minister Datuk Seri Chan Kong Choy.

He said the Railwaymen Union of Malaya (RUM) had proposed to Prime Minister Datuk Seri Abdullah Ahmad Badawi that the government take KTMB under its wings following losses by the company. "The ministry will study and prepare a report on the second memorandum sent by RUM to Prime Minister Datuk Seri Abdullah Ahmad Badawi on May 31," he said at a dinner organised by RUM tonight.
RUM sent the first memorandum on the proposal to Abdullah on Oct 11, 2004.

KTMB was privatised on Aug 1, 1992. In 1997, it came under the supervision of the Merak Unggul Consortium, a company said to have incurred "losses running into millions of ringgit before tax." Chan said the ministry would support a proposal that would benefit the nation and sector but fell short of stating his support for the proposal by RUM.
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BACKGROUND toProject delays:

Date: Sep 2003
Rail project delayed by contractor claims
FRANCIS FERNANDEZ

THE steering committee set up by the Transport Ministry to oversee the RM4.6 billion, 180km Ipoh to Rawang double tracking project, hasn’t met for more than 10 months, sources said yesterday. Under the original plan, the special committee, headed by the Ministry’s secretary-general Datuk Zaharah Shaari, was to meet weekly with the lead contractors and the main sub-contractors of the project to help fast track the completion of the job, which has missed its target completion date by close to three years. The double tracking project was supposed to be completed by 2003, but now industry players say that it might only be completed by early 2007. The project is split into two portions. The first is the civil and structural works, which is worth about RM2.6 billion, and the second portion is the systems works, which is worth about RM2 billion. The lead contractor for the civil and structural works is DRB Hicom Bhd, while the systems works contract was given to Mitsui & Co Ltd, Japan's second largest trading company.
The system works can only start when the civil portion is 90 per cent complete. The civil and structural works is said to be about 85 per cent complete. Mail Money was told that the project is progressing at slightly under 0.5 per cent a month. At its peak, the progress was between 0.5 per cent and 1 per cent a month. Much of the delay is believed to be due to the variation claims put forward by the main contractors for the job. Both Mitsui and DRB have put in compensation claims, which in total exceed RM1 billion. It is believed that the steering committee hadn’t met partly because of the disputes regarding the financial claims, as the contractors want a clear picture if their claims will be paid.
Mail Money had previously reported that the Government is in the midst of negotiating with Mitsui over its claims, while the claims made by DRB might go into arbitration.

While its not known why the Ministry hasn’t called for a steering committee meeting, industry players say there is little value in calling for such a meeting now because the delay in the project is not because of logistics but is mostly centered on the financials.

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Malaysia axes DRB-Hicom from rail job; 13 May 2005

Malaysia has removed DRB-Hicom Bhd as main contractor for the country's biggest rail project, which is behind time and over budget, sources familiar with the situation said on May 13. The government intends to give the remaining work on the RM2.60 billion project to UEM World Bhd, sources close to the government and the firms told Reuters.

The government, DRB-Hicom and UEM World declined to comment. DRB-Hicom, which has interests ranging from auto distribution to property and infrastructure, is 15.8% controlled by tycoon Tan Sri Syed Mokhtar Al-Bukhary.

A source close to the deal said DRB-Hicom, which faces a cost overrun of RM700 million, plans to ask the Transport Ministry to reconsider its decision but this could not immediately be confirmed.The source said the Transport Ministry terminated the DRB-Hicom contract two weeks ago."UEM was given the letter of intent about a week ago to take over the unfinished portion for RM1.10 billion," the source added."DRB is seeking to be allowed to finish the job if the government pays RM700 million to meet the cost overrun. The government could save RM400 million."
DRB-Hicom, which won the contract in 2000, has blamed the delays on factors such as land acquisition and late payments. "It's a complex project. The budget was tight from the outset," said a consultant working on the project. "You are looking at an extra RM1 billion." Newspapers have said work on the 180km track between Rawang and Ipoh is 65% complete, but 17 months behind schedule and RM700 million over budget.
The link is the second leg of an ambitious plan to modernise the country's rail system with two parallel lines of electrified track running the entire length of peninsular Malaysia.

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DRB-Hicom’s RM4.6bil rail contract terminated Sunday May 15, 2005

PUTRAJAYA: The Government will take over the Rawang to Ipoh electrified railway double tracking project from DRB-Hicom, the Transport Ministry said. It said in a statement yesterday that with the decision, the contract given to project main contractor DRB-Hicom on July 3, 2000 had been terminated. The balance of work under the contract would be given to another entity, which has yet to be appointed, the statement said. Arrangements to appoint a new party to take over the uncompleted works are now being finalised. The statement, however, did not indicate when the contract was terminated. It was reported that the RM4.6bil project was behind schedule and had gone over the budget. The 182km track is said to be 82% completed but is 17 months behind schedule. The latest completion date reported was 2007. KTM Berhad’s electrified double track sector in the Klang Valley now spans 150km covering Rawang, Seremban, Sentul and Port Klang. The expansion of the double track from Rawang to Ipoh is seen as an important part of the modernisation of the railway system. It aims to reduce travel time between Ipoh and Rawang from the present three and a half hours to two and a half.

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DRB-Hicom fully paid for 'normal claims'
22 May 2005 11:45 AM

By Jimmy Yeow
The government has fully paid DRB-Hicom Bhd, the main contractor for the RM2.58 billion Ipoh-Rawang electric double-tracking rail project, for earlier agreed works, but not for some RM700 million in variance order for additional works. Second Finance Minister Tan Sri Nor Mohamed Yakcop said the "normal claims" had been fully paid. "The variance order is a separate issue," he told reporters after opening Avenue Capital Resources Bhd's “Bangunan Avenue” in Kuala Lumpur on May 20. He declined to elaborate. He was responding to a question on claims by DRB-Hicom that it had not been fully paid for completing 88% of the civil works of the project as well as some RM700 million in variation cost owed by the government. DRB-Hicom had mutually terminated the contract with the government in view of the huge debt owing by the government.
Nor Mohamed said the task of appointing the main contractor to replace DRB-Hicom was with Transport Ministry. “It is the government’s intention to complete it as soon as possible,” he said. United Engineers (Malaysia) Bhd (UEM), which is in talks with the government, is a front-runner for the job to complete the remaining works.
UEM subsidiary UEM Builders Bhd, which is a sub-contractor for the building of RM650 million worth of bridges in the rail project, said earlier on May 20 that it was keen to take up the responsibilities.

[…]
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Media Statement; by Lim Kit Siang ________________________________

(Ipoh, Saturday): When Chan Kong Choy replaced Dr. Ling Liong Sik as Transport Minister in May 2003, one of his priorities was a “fast-track” programme to complete the RM4.6 billion Ipoh-Rawang electrified double tracking project which was one year behind schedule. The double tracking project was originally scheduled to be completed in 35 months in June 2003 from the commencement of the contract in July 2000.

Kong Choy’s first Ministerial initiative has proved to be an unmitigated failure as his “fast-track” double-rail programme has become a joke as the nation’s “slowest ‘fast-track’ project to nowhere”!
This was vividly illustrated during the winding-up of the Transport Ministry in the 2006 Budget debate on Wednesday night.

As Kong Choy was overseas, I asked the Deputy Transport Minister, Tengku Azlan for the latest cost of the Rawang-Ipoh double-tracking project. The Deputy Minister did not know. I asked when the double-tracking project would be completed. The Deputy Minister did not know. What were the new contractual terms in the replacement of DRB-Hicom Bhd by UEM Builders Bhd as the main contractor for the project? The Deputy Minister did not know! In the middle of the year, the Transport Ministry had announced that the government was taking over the double-tracking project and handing it over to UEM Builders as the new “lead contractor”.

What is the progress of the double tracking project since the UEM takeover of the project from DRB-Hicom in the past five months? The Deputy Transport Minister does not seem to have any clue. The RM4.5 billion Rawang-Ipoh electrified double-tracking project is in two packages - the RM2.58 billion infrastructure works originally awarded to DRB-Hicom and RM1.9 billion systems works awarded to Mitsui & Co Transport Systems.
In my media statements in May 2005, I had said that despite Kong Choy’s “fast track” programme announced in September 2003, work had been at a standstill for a year because of the dispute over the variation orders claims amounting to some RM700 million by the lead contractor for civil and structural works, DRB Hicom. The questions which I posed to Kong Choy on May 11, 2005 remains as valid now as five months ago, viz:

(i) whether UEM Group Bhd had replaced DRM Hicom as the lead contractor for the unfinished portion of 18% of the project at an additional cost of RM1.1 billion, hiking the infrastructure costs from RM2.58 billion to RM3.68 billion; and
(ii) how public interests are served by such last-minute “change of horse” in the lead contractor.
With the Deputy Transport Minister unable to answer simple questions in Parliament about the project, such as the new date of completion and its cost, I have reason to believe and fear that Kong Choy’s slowest “fast-track” project to nowhere is shaping up to be a mega-scandal in Malaysia in the 21st century.
Kong Choy’s first duty on his return from overseas is to give a full and satisfactory explanation and accounting of his “slowest ‘fast track’ double rail project to nowhere”. He should explain why the one-year delay in the completion of the project when he took over as Transport Minister has now become at least a four-year delay if not longer – despite all the government talk about efficiency, accountability and integrity which are all absent in the “slowest ‘fast-track’ development project to nowhere”.

Kong Choy must explain what measures he had taken to ensure that the Rawang-Ipoh double-tracking project does not become a mega-scandal involving corruption on a major scale with the attendant crimes of criminal breach of trust and abuse of power.

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Bursa Malaysia Announcement
Subject: Electrified Double Tracking Rail Rawang-Ipoh Project

Contents :
Further to our annoucement dated 13 April 2006, DRB-HICOM Berhad ("DRB-HICOM" or "the Company") is pleased to announce that the Government and the Company had amicably resolved on the settlement for the payment of variation order and loss and expense claims in relation to additional works done on the Rawang-Ipoh portion of the Electrified Double Tracking Rail Project with the final and full settlement of RM425 million.

Subsequent to this, DRB-HICOM is in further discussion with the Government in regards to related issues pertaining to liquidated ascertained damages and release of performance bond. DRB-HICOM is hopeful and positive that this matter will also be amicably resolved in due course.

DRB-HICOM is thankful that the long-drawn episode has obtained the support and understanding of the Government of Malaysia, the relevant Ministries and Authorities and KTMB. DRB-HICOM also wishes to record appreciation to its Consultants and Sub-Contractors for their patience and understanding extended to the Company

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Kong Choy should explain why Transport Ministry terminated DRB-Hicom as the main contractor for the RM2.6 billion civil and infrastructure works for the Ipoh-Rawang electrified double-tracking because of DRB-Hicom’s RM700 million Variation Order (VO) claims but is prepared to recognize and pay for the RM700 million VO if UEM World takes over the unfinished 12% of contract for RM1.1 billion

2^nd Media Statement; by Lim Kit Siang; (21/05/2005)

(Petaling Jaya, Saturday): A week after the Transport Ministry’s statement last Saturday announcing that the government had removed DRB-Hicom Bhd as main contractor of the RM2.6 billion civil and structure works for the RM4.6 billion Ipoh-Rawang electrified double-tracking rail project, the country is none the wiser about the whys and wherefores to the biggest failure of Datuk Chan Kong Choy in his two-year stint as Transport Minister as well as the biggest PMC (Project Management Consultant) failure to date.

One of the first challenges assumed by Chan when he took over as Transport Minister from the former MCA President, Datuk Seri Dr. Ling Liong Sik, in mid-2003 was to announce a “fast track” programme to complete the Ipoh-Rawang double-tracking project which was already two years behind the original schedule, i.e. to be completed in 35 months in June 2003 from the commencement of the contract in July 2000. In September 2003, Chan announced a “fast track” programme to complete the Ipoh-Rawang double tracking project before October 2005 for the new train service to start in early 2006.

The dynamo of this “fast track” programme was a steering committee which Chan formed and headed by the Transport Ministry secretary-general Datuk Zaharah Shaari to look after the progress of the project. Chan said the steering committee would meet weekly with the main contractors to solve the problems faced in the course of implementing the project. However, instead of meeting weekly, Chan’s “fast track” high-powered steering committee had not met for the past one year! Chan’s “fast track” programme was even slower than during Liong Sik’s stewardship of the Transport Ministry, achieving only some 42 per cent of the construction pace of the previous period. In the 39 months from July 2000 to September 2003, some 72% of the project was completed or an average rate of 1.8% completion of the project per month. However, in the 21 months of “fast track” under Chan, only some 16% of the project was completed, bringing the total completion of the civil works to 88 per cent, or an average rate of 0.76% completion of the project per month under the “fast traick”– which is only 42 per cent of the rate during Liong Sik’s time.
When Chan took over as Transport Minister, the Ipoh-Rawang double tracking was two years behind schedule. Now, there is a four-year delay, with the RM4.6 billion project ending up costing more than RM6 billion. This is because of the sharp jump in the costs of both the two packages of the RM4.6 billion Ipoh-Rawang double-tracking project – the RM2.6 billlion civil works by an increase of RM1.1 billion while the RM1.9 billion systems works awarded to Mitsui & Co. Transport System increased to RM2.4 billion with media reports of Mitsui’s RM450 million variation order claim.

It is clear that the main reason why the Transport Ministry has terminated DRB-Hicom as the main contractor for the civil and infrastructure works for the Ipoh-Rawang electrified double-tracking is because of the unresolved dispute over DRB-Hicom’s RM700 million Variation Order claims, which was submitted before Chan’s “fast track” programme.

DRB-Hicom had claimed that the RM700 million Variation Orders were valid and legitimate as they were made on the advice and instruction from several government agencies, including the Transport Ministry and the Public Works Department. This is however contested by the Ministry of Finance.
If the DRB-Hicom’s RM700 million Variation Order claims had been approved, Chan’s “fast tracking” of the Ipoh-Rawang double-tracking rail project would have remained on track, i.e. completion before October this year for the new service shortening the Kuala Lumpur-Ipoh journey to two hours and 15 minutes with all scheduled stops (an express rail journey will take one hour and 50 minutes) to begin early next year.

Without going into the merits or otherwise of the dispute over DRB-Hicom’s RM700 million variation order claims, Parliament and the Malaysian taxpayers are entitled to a full explanation from Chan Kong Choy why the government has taken the extraordinary position clearly against public interest of refusing to recognize the RM700 million Variation Order claims by DRB-Hicom, but yet prepared to recognize and pay for the whole Variation Order claims if the contract is taken over by UEM World, at a cost of RM1.1 billion (inclusive of the disputed RM700 million Variation Order claims) for the balance of the 12 per cent of unfinished portion of the contract.

Malaysians must find this most strange and inexplicable – why the government refused to recognize and honour DRB-Hicom’s RM700 million Variation Order claims which would have ensured that Chan’s “fast track” programme would have succeeded, and yet prepared to recognize the RM700 million Variation Order claims if the UEM World takes over the contract at an additional cost of RM1.1 billion for only 12% of the uncompleted portion of the project.