A joint venture between Malaysian builders Gamuda and MMC Corp Bhd has received preliminary government approval to manage a RM36bil rail project, sources with direct knowledge of the deal saidyesterday.
The companies got approval to oversee the building of a 156km mass rapid transit project in Kuala Lumpur and the surrounding areas after a weekly government cabinet meeting, said one source who declined to be identified.
Gamuda and MMC were not immediately available for comment.
“However, it’s not certain whether Gamuda-MMC will also be awarded the tunnelling portion of the project,” the source said, referring to the RM14bil drilling component of the project.
The rail system is part of a government plan to alleviate traffic congestion in the capital, and is expected to spur a slew of other building projects and contribute to economic growth.
Analysts expect the Gamuda-MMC venture to get the tunnelling job as they have had similar previous experience.
Local media had previously said the Government was contemplating a “Swiss Challenge” model for the tunnelling project, where other parties were invited to put in bids that match or better Gamuda-MMC’s offer.
Construction analysts said the market had not fully priced in the award of the contract into the companies’ share price.
“Our target for Gamuda is RM4.64 per share, so there’s still more room to move,” OSK Research analyst Jeremy Goh said.
But another construction analyst said investors were cautious about the project’s execution, though Prime Minister Datuk Seri Najib Tun Razak’s drive to improve transparency could improve matters.
“If you look at all these huge government projects, they are always subject to political risks and delay,” he said, referring to the award of a RM515mil rail project spanning the peninsular, which was delayed by flip-flops in government policy. - Reuters
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