MRCB George Kent Sdn Bhd (MRCB-GK) has received a letter of appointment from Prasarana Malaysia Bhd for the proposed Light Rail Transit Line 3 (LRT3) project from Bandar Utama to Johan Setia for a fixed price contract of RM11.856 billion.

In a filing with Bursa Malaysia, MRCB-GK, a project delivery partner comprising Malaysian Resources Corporation Bhd and George Kent (Malaysia) Bhd, said the contract was for the proposed design, construction, completion, testing and commissioning of the project.

It said the contract sum of the project also included a contingency or provisional sum of RM400 million, which, if not utilised, would reduce the contract sum.

However, negotiations on the fixed price contract will continue to allow the contract to be executed not later than Dec 12, 2018.

It said the project completion is set on Feb 28, 2024, unless extended in accordance with the contract.

MRCB-GK shall also provide a performance bond for the equivalent amount of five per cent of the contract sum within 30 days of the date they received the letter of appointment on Nov 2, 2018.

Meanwhile, both MRCB and George Kent need to provide a proportionate corporate guarantee to Prasarana.

MRCB-GK said the project would not have any significant effect on the earnings and net asset of the MRCB Group and George Kent Group for the financial year Dec 31, 2018 and Jan 31, 2019, respectively.

However, it would likely contribute positively to the future earnings of both groups.

"The project is subject to normal business risks such as an increase in costs due to any escalation of material costs and contractual terms including default provisions.

“As such, the management will put in place control measures and operational procedures to reduce the impact of likelihood of such events," they said.

The fixed price contract is a further reduction of the cost announced by Finance Minister Lim Guan Eng in July that the cabinet had given its approval to continue with the LRT3 project at a reduced cost of RM16.63 billion or a 47 percent reduction.

The projected cost of the LRT3 project submitted by Prasarana in March was RM31.65 billion.

- Bernama