Revised RM16.8bil ceiling for LRT Mutiara Line reflects market conditions, not cost escalation, MRT Corp clarifies

KUALA LUMPUR: MRT Corp clarified on Thursday (Aug 21) that the budget ceiling for the LRT Mutiara Line project has been set at RM16.8bil, stressing that the figure reflects current market conditions and not uncontrolled cost escalation.

The company said the original estimate for the Penang LRT Bayan Lepas Project in 2016 was RM10bil, based on an alignment from Silicon Island to Komtar.

“When the Federal Government took over the project in early 2024, it was renamed the LRT Mutiara Line and its alignment extended from Macallum to Penang Sentral,” it said in a statement on Thursday.

“This expanded scope raised the cost to RM13bil, enabling the line to serve a wider catchment area,” it said.

Following its appointment as project developer and asset owner, MRT Corp conducted detailed studies, engineering assessments and sought independent cost reviews. The revised budget ceiling was attributed to global supply chain inflation, rising land values, and additional works at Macallum and Silicon Island.

In December 2024, the government approved the RM16.8bil ceiling and mandated MRT Corp to ensure actual costs remain below this figure. Final costs will depend on ongoing and upcoming open tenders.

In January this year, a conditional civil works contract worth RM8.31bil was awarded to SRS Consortium Sdn Bhd, later reduced to RM7.93bil following a value management exercise in April.

MRT Corp added that the ceiling includes about RM2bil for land acquisition, while the balance RM6.8bil will go towards Civil Main Contract Package 2, the Sungai Nibong depot, systems turnkey contracts, and project management costs.

“MRT Corp reiterates that the revised ceiling does not represent uncontrolled cost escalation, but reflects prevailing market conditions since the last eight years,” the company said

Meanwhile, MCA vice-president and Penang liaison chief Datuk Tan Teik Cheng criticised the sharp increase in project estimates, noting that the Penang LRT had jumped from RM10bil announced under Budget 2024 to RM16.8bil within a year.

He said the Transport Ministry’s explanation that the difference stemmed from “value management” was insufficient.

According to Tan, the people deserve clarity on whether this simply masked poor planning or whether genuine technical upgrades had driven the increase.

Tan also highlighted that the Penang LRT was originally touted as a Public–Private Partnership (PPP) to reduce the financial burden on taxpayers. However, the government has since reversed this approach, deciding to fund the entire project using federal allocations.

“Was there a feasibility issue that caused private sector players to withdraw or did the government decide to abandon the PPP model without proper justification?” he asked in a statement.

Reiterating MCA’s call for responsible governance, he said Malaysians have every right to question how public funds are managed.