Monday, November 03 2003 - GAMUDA Bhd does not expect the Indianauthorities to retaliate over the failure of Indian Railway ConstructionCo (Ircon) to win the North-South double-tracking rail project.

Gamuda and partner Malaysia Mining Corp Bhd (MMC) were awarded the RM14.5billion project last week.

A Gamuda source said he believes the Indian Government will actprofessionally rather than emotionally in the matter.

This is a commercial decision (based on fair pricing). It is common to seemany project proposals getting wiped out rather than approved, the sourcetold Business Times in Kuala Lumpur.

He was commenting on a Business Times report on Saturday that the IndianGovernment may issue a response this week over the sidelining of Ircon,once the forerunner for the project’s northern grid from Ipoh to PadangBesar.

Gamuda is currently the main contractor for two ongoing expresswayprojects in West Bengal, valued at RM700 million, which were awarded on alowest bidder basis.

Some Malaysian companies with projects in India, meanwhile, are worriedthat there will be some fallout from this ongoing episode.

Some are linking the cancellation of Road Builder (M) Holdings Bhd’s RM261million road contract by the Maharashtra State Government in India lastweek to the rail project award.

Road Builder told the Kuala Lumpur Stock Exchange that the cancellationwas due to failure to agree on terms.

Other Malaysian construction firms with interests in India include IJMCorp Bhd, Ranhill Bhd, United Engineers (M) Bhd and WCT Engineering Bhd.

Fears have also been expressed that India might consider reviewing thelanding rights of Malaysia Airlines and preferential tariffs on the importof palm oil from Malaysia. India is one of the biggest buyers of Malaysianpalm oil.

In 2002, Malaysia’s trade with India totalled RM9.14 billion with exportsfrom Malaysia outpacing imports by RM6.69 billion against RM2.44 billion,according to Malaysia External Trade Development Corp.

The MMC-Gamuda Joint Venture (JV) was awarded a contract to build theelectrified dual-rail track in favour of Ircon and China RailwayEngineering Corp (CREC) which had been issued letters of intent in themiddle of 2002.

Ircon and CREC, when offered rights of first refusal to be sub-contractorsto the MMC-Gamuda JV, turned down the offer.

A top government meeting was held in New Delhi on Friday between theIndian Railway Ministry and the Indian Prime Minister’s Department andsenior officials of Ircon, to deliberate on media reports concerning theproject’s award to the MMC-Gamuda JV.

Meanwhile, the source also hit out at what he described as irresponsiblequarters who doubt Gamuda’s experience and expertise to undertake such amassive project.

Our ability to complete mega billion infrastructure projects such

billion infrastructure projects such as the Kesas, Sprint andDamansara-Puchong highways ahead of schedule and within the project’sbudget, speak volumes of our performance track record.

Building railways is an 100 year-old industry, of which 80 to 85 per centof the jobs is centred around civil engineering works such as buildingbridges and ground improvements.

Laying the track is only a small part of the project, and we have lots ofresources to rely on, he said.

India and Malaysia signed a memorandum of understanding (MOU) for thedouble-tracking and electrification of the Ipoh-Padang Besar stretch inMay 2001 in the presence of visiting Indian Prime Minister Atal BihariVajpayee and his Malaysian counterpart, Tun Dr Mahathir Mohamad.

Under that MOU, Ircon holds a 70 per cent stake for the 329-km northernstretch with partners DRB-HICOM Bhd and Emrail Sdn Bhd hold 15 per centeach.

CREC, meanwhile, holds a 70 per cent stake for the construction of the288-km southern grid from Seremban to Johor Baru with partners DRB-HICOMBhd having 15 per cent, and MMC Engineering Group Bhd and Hikmat Asia SdnBhd sharing the remaining 15 per cent.

The project, deemed to be part of the 5,500km trans-Asia link betweenSingapore and Kunming in southern China, was earlier proposed as acounter-trade arrangement between Malaysia and India and China to swap anestimated eight million tonnes of palm oil in exchange for rail works overa five-year period.