MRT Corp expects another round of sukuk from Danainfra by year-end

The Edge, 24 July 2014

PETALING JAYA: Mass Rapid Transit Corp Bhd (MRT Corp) expects Danainfra Nasional Bhd to issue another round of sukuk by year-end to raise funds for the Sungai Buloh-Kajang MRT project, said MRT Corp chief executive officer Datuk Wira Azhar Abdul Hamid (pic).

He said the sum would not reflect a huge value, but conceded that it would depend on the company’s cash flow requirements.

“The amount of funds raised via sukuk [so far] is RM11 billion. As of June 30, we [had] spent about RM8.03 billion of that to pay contractors, project delivery partners, consulting engineer fees, project supervisor and insurance.

“The next round of sukuk issuance will not be that big as we still have some funds left from the previous issuance. We are trying very hard to control our spending,” he told reporters after a briefing on the MRT expenditure yesterday.

A sum of RM6.6 billion has been paid out to work package contractors and RM1.03 billion to the project delivery partner. Meanwhile, RM128.42 million was paid out as consulting engineers’ fees, RM145.83 million for project supervision/overheads and RM66.84 million for insurance.

Danainfra, a wholly-owned subsidiary of the Minister of Finance Inc, was established as a social funding vehicle for the government to source for funds to finance infrastructure projects.

On the progress of the MRT project, Azhar noted that it is running “a little ahead of schedule” and is now 47.63% complete.

Its underground work is 63.34% complete or 2.57% ahead of schedule, while the elevated work is 37.24% complete. Tunnelling progress is at 65.9%.

“To date, 77 out of a total of 85 contracts have been awarded, with a total value of RM21.09 billion,” said Azhar.

He said there were seven work packages worth RM300 million yet to be tendered, including for the construction of a park and ride facility at Cheras Sentral.

“We expect to complete our procurement process by awarding the remaining seven work packages by the end of this year,” he said.

On MRT Corp’s arrangement with Syarikat Prasarana Negara Bhd (Prasarana), the government-appointed operator of the infrastructure, Azhar said nothing has been finalised yet.

He said the company had a discussion with Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah. “There will be some sort of agreement between the two parties on how the MRT infrastructure is going to be operated. [But] nothing is finalised yet. Discussions will continue after Hari Raya Aidilfitri,” he said.

Meanwhile, the first set of four car trains for the Sungai Buloh-Kajang MRT line had arrived and are currently being assembled at the contractor’s assembly plant in Rasa, Hulu Selangor.

Azhar said the car trains are expected to be delivered to the Sungai Buloh depot by November where they will undergo testing at the facility.

The MRT is a new rail transport system for the Klang Valley and it is part of the government’s Greater Kuala Lumpur or Klang Valley National Key Economic Area. The Sungai Buloh-Kajang line is estimated to cost RM30 billion.

As for the possible integration of the MRT line with the proposed third light rail transit (LRT3) line from Bandar Utama to Klang, Azhar said the company has yet to discuss it with Prasarana.

He said the integration needs to be planned out but warned that if the planning comes too late, more changes will need to be made, which will be costly.

This article first appeared in The Edge Financial Daily, on July 24, 2014.

(Web source: http://www.theedgemalaysia.com/business-news/300009-mrt-corp-expects-another-round-of-sukuk-from-danainfra-by-year-end.html)