As someone who has examined many infrastructure projects, I would like to
relate my observations about the LRT projects.
The LRT projects were never commercially viable in its fully privatised form. Few mass transit projects in the world are actually profitable. The conditions necessary for a privatised project to be profitable are very
intense - like high urban density, co-ordinated transportation system and reasonable level of income. Even the Singapore SMRT project is subsidised by the government in terms of initial construction. How the project could be viewed as viable from the start is nothing more than bureaucrats and cronies who did not know what they were doing.
The LRT projects were motivated by the prospect of construction income to fill some coffers rather than its actual viability. The construction was done by the proponents and shareholders of the projects. Since lending by EPF and the state agencies provided the bulk of financing, the proponents were profitable regardless of whether the project was viable or not.
The bailout of the project by the government again filled the coffers of the same proponents. The proponents did not even have to lose their equity share and already made money from the construction, the bailout put even more money into those same coffers. The fact that those same proponents now are being paid for running the system and not the risk of the business is too incredulous.
The LRT projects will never be profitable. The necessary traffic for the project to make money is still a long way off. Even if the entire KL transportation system was overhauled and we have a doubling of urban density, it is unsure if the project could be profitable. In order to maintain a modicum level of service, the project will need continued funding by the government for many years to come. Considering that those same proponents of the project are running the business, it is likely that more milking of the system will continue.
The LRT projects are a reflective of our political process where mediocrity and interests of a few are paid for by the general public. The burden of those projects will continue to enslave the public for a long time to come. Considering how big a fiasco they were, I am surprised that they have not received more publicity.
