MALAYSIA Steel Works (KL) Bhd (Masteel) (5098) and KUB Malaysia Bhd have proposed to develop and operate a RM1.23 billion-intercity rail transit system project in Iskandar Malaysia, Johor.
The companies have worked on the proposal for the past one year and are now in discussions with the government on the concession.
"We hope to complete the discussions within this year. (If materialises), the rail transit system is expected to be ready for operation not later than end of 2013," Masteel managing director Datuk Seri Tai Hean Leng told a news conference after the signing of a joint venture agreement in Kuala Lumpur yesterday.
Deputy Minister in Prime Minister's Department Datuk Liew Vui Keong witnessed the signing.
Masteel and KUB have formed Metropolitan Commuter Network Sdn Bhd (MCN) to undertake the project. Masteel holds a 60 per cent stake and the remaining stake, by KUB.
The 100km-intercity rail system - the first in Johor - has been proposed to run on KTM Bhd (KTMB)'s existing rail track, covering 25 commuter stations in major towns. It may eventually be connected to the MRT line from Singapore.
Tai and KUB group managing director Datuk Mohd Nazar Samad are optimistic of returns from the project as it will provide a recurring income during the 25-year concession period.
For the rail transit project, MCN has to secure licensing from The Land Public Transport Commission and concession from the Economic Planning Unit.
The project, which will take 24 months to complete, will involve the rolling stock, electrification, signalling as well as upgrading existing stations and construction of four new stations at new growth areas.
Tai, who is also MCN managing director and chief executive officer, said the intercity train coaches will be purchased either from China or Europe.
About 70 per cent of the project cost will be financed under the public-private partnership scheme.
Masteel and KUB will raise the fund for the project through equity and bond.
Tai did not disclose when the project is expected to break even.
"We believe that not only it will be lucrative, but we are also confident that we'll be able to implement it successfully based on the combination of our core compentencies," he said.
He said KUB has expertise in information communication technology and property, engineering and construction, while Masteel is strong in complex engineering, automation system and maintenance of mechanical system.
This is the first time steel maker Masteel ventures into infrastructure and public transport sector.
Tai said steel will continue to be the company's core business.
"However, if opportunity exists, we will expand our services using KTMB's rail track, such as express train or freight," he added.
The rail project in Iskandar Malaysia is also expected to ease traffic congestion, which is growing 4.2 per cent annually along Johor and Singapore.
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