MRT project may be tough to pull off: OSK

While describing the proposed RM36 billion Mass Rapid Transit (MRT) project as good, OSK Research however feels it may be difficult to pull off.

Funding, it highlighted, will be a prime concern given the government's efforts to cut the deficit.

"Indeed, the MRT proposal sounds like a very good plan in enhancing public transportation within the Klang Valley.

"However, we remain doubtful if the project will take off that quickly, and if at all," OSK said in its research note today.



It said RM36 billion is a "gigantic sum to fork out" and if approved, the MRT would be Malaysia's single largest project implemented to date.

OSK also said the implementation of such large scale jobs are usually faced with many hiccups.

"The RM12.5 billion Electrified Double Track project is an example. It was awarded in 2003, before being pulled back and re-awarded again, only in end-2007.

"Further, we understand that 50 per cent of the LRT (Light Rail Transit) extension alignment, has yet to be finalised. We think the priority is to get the LRT started first," it added.

Other factors include land issues, resistance from political opposition parties and pressure from "well connected" developers to change the alignment, it added.

Commenting on Gamuda's electrified double track project, OSK said it is now 44 per cent complete, with 95 per cent of the required land, handed over.

Meanwhile, MIDF Research House said the proposed MRT project would be the key catalyst for Gamuda's stock in the near term.

It said Gamuda-MMC JV is currently in advanced discussions with the government for the proposed MRT project that was presented to the government in January this year.

The construction works of the MRT is targeted to start by January 2011, if everything goes as planned and all necessary approvals are obtained fromt he relevant parties, MIDF said.

The research house also said Gamuda-MMC has indicated, it is targeting to undertake the underground portion of the works, estimated at 30 per cent of the total project or RM11 billion.

"Meanwhile, the remaining 70 per cent or RM25 billion for above ground works will be tendered out to other contractors, with Gamuda-MMC JV being the project manager.

"Gamuda-MMC JV is banking on its track record for the RM11 billion electrified double tracking project as well as the construction of the Kaohsiung MRT project in Taiwan to secure the proposed project," it explained.

Gamuda's orderbook now stand at RM6.5 billion.--Bernama