The government will not reopen tender for the LRT3 project as it will incur an additional cost of over RM4.2 billion.
Finance Minister Lim Guan Eng said the government would instead renegotiate the current contract to a fixed fee contract to ensure there would not be added cost to be paid to its project delivery partners (PDP).
He said the decision (for a fixed fee contract) was in view of the additional amount paid to the PDP under the Barisan Nasional (BN) government previously, which was said to have ballooned to RM15 billion from the initially approved RM9 billion.
"Why did the then government approved the increased cost to RM15 billion? Even if the PDP failed to comply to some of their agreements, the government should have addressed it face on. So now we have no choice.
"If we discontinue LRT3, it will be problematic as it is much needed. But if we reopen tender, we have to pay compensation over RM4.2 billion in sunk cost.
"It is in view of all this that we decided for LRT3 to be renegotiated as fixed fee contract. This will ensure the cost is fixed and there will be no extra payment made to the PDP," he said in the Dewan Rakyat on Tuesday, 7 August 2018.