By Shannon Teoh
June 20, 2011 | The Malaysian Insider

KUALA LUMPUR, June 20 — A Finance Ministry committee has changed its mind by awarding the contract for the Kelana Jaya light rail transit (LRT) extension to a consortium led by British firm Colas, after controversially ordering a deal last week with another joint-venture.

But the committee’s latest decision continues to ignore the recommendation of LRT operator Syarikat Prasarana Negara Berhad for the contract to be awarded to a third company in the frame.

The Singapore Straits Times reported today that the joint-venture between Colas and CMC Engineering Sdn Bhd would be awarded the project, citing senior industry executives and government officials close to the tender as its source.

Last week The Malaysian Insider reported that a finance ministry committee ordered Syarikat Prasarana Negara Bhd to award the deal to the Hartasuma Sdn Bhd-Bombardier joint-venture, whose RM890 million bid is nearly 50 per cent higher than the RM610 million quoted by the LRT operator’s choice, Ingress Corp Bhd-Balfour Beatty Rail Sdn Bhd.

This new about-turn, if confirmed, comes ahead of Prime Minister Datuk Seri Najib Razak’s official visit to London next month where he is hoping to meet his British counterpart David Cameron.

The Singapore Straits Times quoted political analysts and industry executives as saying that the “behind-the-scenes intrigue shows how opaque and non-transparent practices that have long characterised large public-sector contract awards remain the order of the day in Malaysia.”

Calling the LRT deal “a strong test case” for Najib’s administration, the ST said that the decision to override Prasarana would “likely to dull Kuala Lumpur’s efforts to attract much-needed foreign investment.”

The project will extend and upgrade of electronic and mechanical systems for the Kelana Jaya line that will now stretch another 17km to Subang Jaya.

Prasarana is spending some RM7 billion for the extension of both the Kelana Jaya and Ampang LRT rail networks. The Ampang network will be extended by another 17.7km.

The wholly-owned unit of the Finance Ministry was forced to cave in to pressure from Malay rights groups last month when it revised pre-qualification criteria for several construction packages for the Klang Valley Mass Rapid Transit (MRT) by allowing joint-ventures or consortiums.

It had on March 30 imposed additional criteria on contractors taking part in the project tender which disallowed them from forming joint ventures or consortiums.

Perkasa, however, accused Prasarana of blocking Bumiputera contractors from participating by enforcing “strict” guidelines that would only benefited “rich non-Bumis”, saying that project delivery partner MMC-Gamuda was “looting and monopolising” the project.

The MRT is expected to be the largest-ever construction project in Malaysia and had earlier been estimated to cost between RM36 billion and RM53 billion.