Prime Minister Abdullah Ahmad Badawi said today that the government stands firm on its decision to shelve a controversial RM14.5 billion rail project, one of Asia's biggest infrastructure deals.

"We have given a statement on the postponement so, (they'll) have to wait," Abdullah, who is also finance minister, told reporters.

He was commenting on a statement yesterday by infrastructure group Gamuda that the letter of award given to a consortium comprising Gamuda and partner Malaysia Mining Corp. (MMC) was legally binding and that it hoped the project would proceed.

Abdullah said, however, that he has informed tycoon Syed Mokhtar Al-Bukhary, who heads MMC, about the government's final decision.

Abdullah, who became premier just over two months ago after succeeding veteran strongman Mahathir Mohamad, shelved the rail project to focus on more needy development schemes and trim a serious budget deficit.

Close ally of Dr M

The project involves laying a dual track and electrifing the main rail line running the length of peninsula Malaysia, which forms part of an ambitious 5,600-kilometre trans-Asia link.

It was initially promised to a consortium of contractors from India and China but days before he retired on October 31, Mahathir awarded it to the MMC-Gamuda group without a competitive bidding process, raising fresh questions about transparency and the traditional linkage between business and politics.

MMC is the flagship of Syed Mokhtar, a close ally of Mahathir who has amassed a wide array of businesses ranging from ports, power and plantations to manufacturing, health care and tourism.

Analysts said Abdullah's decision to reverse Mahathir's stand suggested he may favour smaller projects rather than the multi-billion-dollar mega-deals favoured by his former mentor during his 22 years in office. - AFP