KUALA LUMPUR, Nov 8 — Malaysia Rail Link Sdn Bhd, the little-known local company involved in the multi-billion East Coast Rail Link (ECRL) project, is a special purpose vehicle fully-owned by the Ministry of Finance, Datuk Seri Abdul Rahman Dahlan revealed today amid scrutiny over its profile.

The minister in the Prime Minister’s Department in charge of the Economic Planning Unit said establishing such a special purpose vehicle is a norm for mega projects undertaken by the government.

"Yes, it has a built-up capital of RM2 but it is wholly owned by the Finance Ministry and that is how it is done in the past, even for the Kuala Lumpur-Singapore High Speed Rail project,” he told a news conference at the Parliament lobby here, referring to Malaysia Rail Link.

A special purpose vehicle is usually formed as a subsidiary of a big corporation with a strong built-up capital or a legal body that is affiliated with the government to ease transaction into business deals.

Abdul Rahman also said the decision to go ahead with the project was discussed at the National Economic Council and in Cabinet, adding that it was not necessary to bring such matters to the Parliament.

He also clarified that the initial cost was RM46 billion when the rail route was from Gombak to Tumpat.

"But later we wanted the rail link to be extended up to Port Klang and that is why the extra RM9 billion,” he explained.

Rahman’s clarification comes after PKR’s Rafizi Ramli claimed that the contract for the 688km long rail track was awarded to a company with only a build-up capital of RM2.

The Opposition MP expressed doubts as he showed some news reports as reporting the cost of the project as RM46 billion while others quoted as RM55 billion.

Explaining further on the ECRL deal, Abdul Rahman said China’s largest construction company, China Communications Construction Co (CCCC) will build the project while the ownership and operations will remain in the hands of Putrajaya.

"Hence, the allegation of Malaysia losing its sovereignty does not arise at all,” he said.

The Kota Belud MP also denied a news report that said ECRL was the most expensive rail project in the world.

"Every rail project has its own unique cost structure due to differing geographical conditions and infrastructure requirements,” he said.

He cited the 57km-long Bremmer rail project in Switzerland costing US$11.9 billion as a case in point.

He said the construction of the ECRL requires building 110km of roadworks from multiple bridges and 50km in multiple tunnels across the Titiwangsa mountain range as among the reasons for the hefty price tag.

"Also, we need to pay a Chinese company to do the job because we don’t have the expertise and we need to acquire land, materials and these will incur cost,” he added.

Once the construction of the project is completed in seven years, Rahman said almost 70 per cent of the ECRL will be for carrying goods while the remainder will cater to passengers.

"By 2035, we estimate ridership of ECRL to be 7.7 million,” he said.