The government has stripped of its contract the main company in a RM4.6 billion rail project plagued by delay and budget overruns.

In a statement late Saturday, the transport ministry said the electrified double track rail project given to DRB-Hicom on July 3, 2000 had been terminated. It did not state its reasons.

The balance of work under the contract would be given to another group, it said, without naming the contractor.

"With the decision, the remaining work that has to be completed under the contract agreement will be awarded to an entity which will be given the responsibility to continue with the project," it said.

Bernama news agency said that the 180-kilometre track between Rawang, just north of Kuala Lumpur and Ipoh, was only 65 percent completed and 17 months behind schedule and had gone RM700 million over budget.

DRB-Hicom group, whose major businesses include automotive, property and infrastructure, is over 15 percent controlled by tycoon Syed Mokhtar Al-Bukhary.

The transport ministry said it was finalising the appointment of the group that would take over the project.

Bernama said UEM group, one of five sub-contractors for the Ipoh-Rawang track had expressed interest in completing the project.