Prime Minister Mahathir Mohamad said a Chinese firm building a rail link across peninsula Malaysia will help to manage, operate and maintain the network that will help reduce the nation’s financial burden.
Even the East Coast Rail Link was suspended after Mahathir’s alliance swept into power last May, a conclusion that strained Malaysia’s connections with China, its biggest trading partner. The job was revived last week after the builder, state-owned China Communications Construction Company Ltd., agreed to reduce the price by one-third to 44 billion ringgit ($10.7 billion).
The rail link connecting the west coast to rural states of Malaysia is a key part of China’s Belt and Road infrastructure initiative.
Mahathir said Monday the authorities chose to renegotiate the deal instead of pay compensation of 21.78 billion ringgit ($5.3 billion). He said the fact the project cost can be reduced sharply by 21.5 billion ringgit ($5.2 billion) showed that the cost had been inflated when former Prime Minister Najib Razak’s government awarded the major contract to CCCC at 2016.
Under the deal, Mahathir said CCCC will create a venture company with Malaysia Rail Link to offer support and discuss the threat that was operational. He said the participation of CCCC as railroad operator will help attract Chinese investment along the railroad link corridor.
CCCC has additionally agreed to repay part of a 3.1 billion ringgit ($753.4 million) progress payment, with just 1 billion ringgit ($243 million) to be paid within the following two months,” he explained.
Even though the rail project is going to probably be shortened by 40 km (24.8 miles) into 648 kilometers (402.6 kilometers ), he said the double-track line will probably have 20 channels and cut five nations, instead of four previously.
The undertaking, which is slated for completion at the end of 2026 rather than 2024, is largely funded by China.
Mahathir said the government is negotiating the loan amount however it will be decreased substantially and this is going to lead to paying less interest in the loan.
He said the government can be”using the agreement to operate out the purchase of hand oil by China,” but didn’t give further information.
Officials said focus on the railroad link could resume by following month.
The government of mahathir has axed or examined large-scale infrastructure projects it blames on corruption in the government.
Apart from the rail link, the government last year also cancelled two China-backed pipelines costing 9.3 billion ringgit ($2.3 billion) after discovering which 90 percent of this job’s costs had been paid but just 13 percent of job was finished.
The government also said it is investigating whether the government to repay debts of Najib had channeled any cash from the railroad project. May A huge scandal at 1MDB led to the election loss of Najib’s coalition and Najib is on trial for multiple corruption charges connected to 1MDB.