Outgoing Prime Minister Mahathir Mohamad today dismissed India's unhappiness over Malaysia's decision not to award a lucrative double-tracking rail project to its contractors and handed it instead to a local consortium.

Local infrastructure group Gamuda Bhd and its partner Malaysia Mining Corp (MMC) last week announced they had won a RM14.45 billion ringgit contract for the rail project, which forms part of an ambitious trans-Asia link from Singapore to China.

The project was initially promised to the Indian Railway Construction Co (IRCON) and China Railway under a government-to-government initiative, which includes a barter deal to increase exports of palm oil to India and China.

But Malaysia said bids by the Indian and Chinese contractors, which initially quoted RM42 billion ringgit before reducing it to RM24 billion, were too high.

IRCON and China Railway were offered sub-contracting jobs by the Gamuda-MMC consortium, but both groups have turned down the offer.

Wasting government money

Asked to comment on news the Indian government has expressed its displeasure over the matter, Mahathir said Malaysia was still studying whether the project should remain as a government-to-government initiative.

Mahathir, who is also finance minister, said India could still make a bid but it must be at the same level as what local contractors have offered.

"We can't offer to foreigners at a higher price when we are not willing to give to locals who have quoted a lower price. That will be wasting government money," he told reporters after his last parliament appearance before retiring today.

Asked to comment on rumours the Indian government has begun to retaliate by reducing imports of Malaysian palm oil, he said: "I don't know about that. That is rumour only, I don't comment on rumours."

The double-tracking is one of the country's largest infrastructure project, involving the laying and electrifying of 636 kilometers of track straddling the length of peninsula Malaysia and forming part of a US$30 billion trans-Asia rail link. - AFP