The Malaysian government has said that it has cancelled the contract with joint venture contract MMC Gamuda for Kuala Lumpur’s Mass Rapid Transit Line 2 (MRT2) project after failing to reach agreement on the underground section of the scheme.
The unfinished sections of MRT2, which is also known as the Sungai Buloh-Serdang-Putrajaya (SSP) line, will now be put out to international tender and the government has said that this will save costs.
“This decision was made after considering that the federal government can achieve further significant savings by retendering the underground work package compared with the offer made by the existing contractor,” said Malaysian finance minister Lim Guan Eng in a statement.
Guan Eng said that the government and contractor had failed to reach an agreement after the government call on the joint venture to reduce the MYR16.7bn (£3bn) costs.
The finance minister has said that 23% savings have already been delivered on the above ground sections of the 52.2km line, of which 38.7km is above ground. According to Guan Eng, more savings can be gained when the underground section is retendered.
The underground section of SSP extends over 13.5km and has 11 stations.
Work on the above ground section started in 2015 and the project was due for completion in 2022.
MMC-Gamuda has said that it was supportive of the government’s cost reduction drive for the above ground work, which was delivered by reducing the number of stations from 10 to six and reducing the number of station entrances at the remaining stations.
The joint venture said that the costs on the underground section could not be so easily reduced due to the large underground space specified in the design, as well as the risk of sinkholes in the karstic limestone ground conditions.
MMC-Gamuda warned that cancellation of the contract would result in immediate job losses and said that a “flood of lawsuits” from terminated employees, sub contractors, suppliers and manufacturers was anticipated.
The joint venture also claimed that the local consulting engineering firm employed by the ministry of finance lacked the relevant experience to review the project and was too simplistic in its approach.