Guan Eng unmoved by MMC Gamuda JV plea

KUALA LUMPUR: Finance Minister Lim Guan Eng was unmoved by MMC Gamuda Joint Venture's assertions of job losses, stating that it is welcome to place a fresh bid for the underground portion contract of the Mass Rapid Transit 2 (MRT2) project and to communicate its views.
"Until the open tender is called for, anyone can give their views. We have taken the position because we feel we can get better cost rationalisation and they have made an offer which we find inadequate," he told reporters on the sidelines of the Malaysia: A New Dawn Investors' Conference.
"We have got the AG (Attorney-General's) Chambers' views that (for) any work done of course they will get the necessary recompense but this is all provided for ... let the lawyers work it out," he said when asked if there will be compensation to the contractors.
Lim said the government is of the view that it can achieve the best price by way of open tender compared to direct negotiations and gain extra savings.
His comments come against a backdrop of a growing outcry against the government's move to axe MMC Gamuda's contract for the underground portion of MRT2, which will lead to the loss of more than 20,000 jobs in a supply chain of over 600 local companies.
In response to the number of jobs on the line, Lim said as the underground portion is expected to continue there will still be a need for manpower, and these workers can be gainfully employed, whether under the previous contractor or a new one.
"Bear in mind the above-ground portion continues, so you cannot say that everyone will be dismissed. They will still be needed to complete the above-ground portion," he said.
In a statement on Monday, MMC Gamuda urged the Ministry of Finance (MoF) to reconsider its decision to terminate its underground works contract for MRT2 citing a possible flood of lawsuits, the loss of more than 20,000 jobs and a review by a local engineering consulting firm which lacked the relevant experience to do so.
In an attempt to get the ministry back to the negotiation table, MMC Gamuda said that if the target figure of cost savings expected by the government was made known together with the components of the savings as individual items, both parties would be placed in a better position to re-examine these components from where savings could be derived and narrow the differences.
"Our perception of the latest cost gap is that it is an amount which is not unbridgeable. MMC Gamuda believes that MoF's aim of achieving savings is best done by both parties reaching an acceptable compromise instead of terminating the contract and retendering the remainder of the underground works,' it said in its statement.
MMC Gamuda has offered a RM2.3 billion reduction to the RM9.6 billion bill for the remaining underground works for MR2, by reducing the scope of works, the number of entrances to stations and the number of stations from 10 to six.
Meanwhile, on the upcoming US$50.3 million (RM209 million) payment as part of the financial settlement package that the previous administration entered into with Abu Dhabi, Lim said the government will honour its commitments and pay its dues for the interest on the bond issue by 1Malaysia Development Bhd.
"We will not allow the Malaysian government to go into default ... we have taken advice from the AG that we have to honour the commitments legally. Of course, there is a financial consequence. If you default than you will get an automatic downgrade on your ratings,” he explained.