Transport Minister Anthony Loke said on Wednesday the Cabinet gave the green light for the establishment of an operating company to manage the East Coast Rail Link in last week's meeting and he has instructed Malaysia Rail Link Sdn Bhd to finalise the agreement. (Photo by Shahrill Basri/The Edge)

KUALA LUMPUR (July 2): The main contractor of the East Coast Rail Link (ECRL), China Communications Construction Company Ltd (CCCC), is going to bear the operational risks of the rail together with its asset owner, Malaysia Rail Link Sdn Bhd (MRL).

They are going to form a joint venture company to operate the RM50 billion rail that connects Kota Bharu in Kelantan to Port Klang in Selangor, based on a renegotiated contract aimed at sharing the risks of the project to reduce the financial exposure of the Malaysian government, according to Transport Minister Anthony Loke on Wednesday.

MRL and CCCC will each bear 50% of the risk in this joint venture company or operating company (OpCo) if the rail operates at a loss. If the operation proves profitable, MRL will receive 80% of the earnings while CCCC will get the remaining 20%.

"The Cabinet gave the green light to the establishment of OpCo in last week's meeting,” Loke said during the Special Chamber session in Dewan Rakyat on Wednesday.

“I have instructed MRL to finalise the agreement, which will be signed by December this year,” he added.

MRL had clarified back in 2019 when the joint operation was proposed that the partnership would not involve ceding any form of ownership of the ECRL to CCCC, and that the arrangement is purely to share management, operation and maintenance costs, plus the exchange of technical know-how and expertise between the companies.

The 665km project that bridges the east and west coasts of Peninsular Malaysia involves 59 tunnels and construction works spanned four states: Kelantan, Terengganu, Pahang and Selangor.

Once operational, the ECRL will reduce travel time between Kota Bharu and Kuala Lumpur to four hours, compared to a seven-hour car journey.

Construction works on the Kota Bharu-Gombak stretch is expected to be completed by the end of 2026, while the segment from Gombak to Port Klang is anticipated to be completed by the end of 2027, Loke said.

On June 19, state news agency Bernama reported that the construction is proceeding smoothly and has reached 67% completion.