KUALA LUMPUR, July 24 — The price tag for the third line of the Light Rail Transit (LRT3) may rise after all despite the new Pakatan Harapan (PH) government’s recent move to shave the construction costs by a whopping RM15.02 billion.

Citing sources, The Star daily reported today that some of the contractors involved in the LRT3 project are seeking to claim higher compensation from the project delivery partner (PDP) after the government announced tweaks to the design and extended the completion date.

"We have been reminded by the PDP that we would incur cost if we don’t complete the job on time. So, we have already mobilised the staff,” an unnamed contractor told StarBiz after facing the deferred completion date.

According to the report, many LRT3 contractors had already ordered the construction materials based on the specifications that were set and had already made arrangements for the required manpower to get the project done by 2020.

The LRT3 project — a joint venture between Malaysian Resources Corp Bhd (MRCB) and George Kent (M) Bhd — which had a budget of RM10 billion when it was first announced in Budget 2016 had already seen the award of RM15 billion in contracts before the 14th general election this May.

But the PH government earlier this month stopped work on the LRT 3 project that it claimed had ballooned to a cost of RM31.45 billion, and had on July 12 announced cost-trimming steps such as extending the project timeline from 2020 to 2024 as the speeding up of the project had allegedly led to inflated acceleration costs.

Other measures which the PH government unveiled on July 12 to reduce cost by RM15.02 billion from the alleged RM31.65 billion to RM16.63 billion include, reducing the order of 42 sets of six-car trains to 22 sets of three-car trains, and cancelling six stations including five with projected low ridership figures.

The daily also reported that a consortium of three companies — CRRC Zhuzhou Locomotive Co Ltd-Siemens Ltd China-Tegap Dinamik, which has a RM1.2 billion contract to supply the LRT 3’s rolling stock or train, was one of those who had written in to the PDP regarding compensation costs.

In a July 12 letter, the consortium informed the PDP that the stop work order will result in costs being incurred, highlighting that new train configurations will affect project costs and the train sets’ technical performance.

"The contractors are suggesting that Prasarana Malaysia Bhd and the PDP undertake a proper analysis on the compensation cost to be incurred due to the changes in the schedule of completion and the design of the project,” an unnamed source was quoted saying.

According to news report, the LRT3’s main contractors for civil works are Sunway Construction Group Bhd, Mudajaya Group Bhd, WCT Holdings Bhd and Gabungan AQRS Bhd, while the contractors for system works and rolling stock are mostly Chinese companies including CRRC Zhuzhou, China Machinery Engineering Corp, CMC Group and ZTE Corp.

It is currently unknown what the total compensation claims could amount to, or if they would be significantly lesser than the RM15.02 billion cost savings that could possibly still make the PH government’s tweaks worthwhile.

Following the PH coalition’s taking over of federal power in May, the federal government has started reviewing multiple mega projects that were initiated under the previous Barisan Nasional (BN) administration in a bid to cut wastages and reduce costs.

But such reviews may have an unintended result of also hurting local interests, as seen in the US$20 billion (RM94.5 billion) mega rail project East Coast Rail Link (ECRL) that has been suspended since July 3.

Last Saturday, a report said almost half of some 2,000 ECRL workers that were mostly Malaysians had been laid off.

Channel News Asia had reported foreigners account for only 30 per cent of the project’s workforce in Bentong, Pahang.

Yesterday, ECRL’s main contractor China Communications Construction (ECRL) Sdn Bhd (CCC-ECRL) expressed hope that the suspension will be temporary, noting that it had already reduced its workforce and compensated them fairly, and had also offered pay cuts or non-pay leave to the rest.