KTMB to Acquire RM1b Rolling Stock to Expand Services

KTMB to Acquire RM1b Rolling Stock to Expand Services

KERETAPI Tanah Melayu Bhd (KTMB) plans to add rolling stock for its rail freight services, including thousands of wagons and more than 30 locomotives valued at more than RM1 billion.

The Star reports, KTMB CEO Datuk Ir Kamarulzaman Zainal said the rail company aimed to increase its revenue generation from the rail freight services, which delivered about RM130 million or 26% of the state-owned rail company’s total annual income.

Kamarulzaman said there is a huge uptick in KTMB’s cargo services as the company can run six million tonnes of cargo annually presently.

He also said the company plans to finance the new rolling stock with a new financing model after an open tender scheme to acquire the wagons and locomotives was put on hold.

“So, we wish to review the deal, but this time with a new model — a private financing initiative. The private parties will invest in KTMB’s wagons and locomotives, and they will be paid back based on the revenue or profit sharing that will be determined later.

“This will be done without the interference of the government’s procurement,” Kamarulzaman said in Kuala Lumpur recently.

He was appointed to lead KTMB on Oct 21, 2019. The former Royal Malaysian Air Force officer replaced Mohd Rani Hisham Samsudin, whose contract ended on Sept 15 after two years at the helm of the company.

The national railway company is struggling to improve its balance sheet since its corporatisation in 1992.

Kamarulzaman said the government continues to inject the fund to keep the 135-year-old rail company running.

But he stressed KTMB would be more prudent and innovative in obtaining future assets, including to expand its cargo services market.

Currently, KTMB has about 1,500 16-tonne wagons and 40 locomotives.

“To fulfill the market’s needs, we need to add 30 locomotives and around 1,200 20-tonne wagons to meet the demands of carrying heavier cargo.

“With the addition of these rolling stock, we could increase the frequency of the services,” he said.

He said the 71km-long single rail track between Port of Tanjung Pelepas and Johor Port in Pasir Gudang only runs three times a week.

“After acquiring the rolling stock, we could perhaps run seven days a week,” Kamarulzaman said, adding that one of the most lucrative markets is cement transportation.

He said presently KTMB could only ferry 30% of the total cement market throughout the country.

Kamarulzaman said based on the Ministry of Transport’s (MoT) call for tender last year, 18 companies submitted their proposals and seven had been shortlisted to deliver the rolling stock.

He said KTMB will engage all of the companies for a possible joint-venture arrangement.

“This arrangement will be finalised soon and hopefully, we can see some improvement in the companies’ balance sheet by next year. The rolling stock will be delivered in stages and it requires at least six months of lead time after the orders are made,” he said.

The focus on rail cargo is also in line with the government’s new direction according to the

National Transport Policy 20192030 in October last year.

The blueprint outlines the need to capitalise on the country’s 1,900km rail network to ferry large and heavy freight.

Kamarulzaman said there is also a need to develop new alternative routes like the Serendah-Port Klang Rail Bypass project to address any congestion, especially in the Klang Valley.

A six-month study would be conducted by the MoT and the Economic Affairs Ministry based on the original proposal of the East Coast Rail Link from Serendah to Port Klang.

Kamarulzaman also opposed the idea of a multi-railway operator, a plan to open its railway network for other companies’ coaches and wagons.

“We stand by our principle that if there is another operator who wishes to embark on rail services, it must use other routes which will not jeopardise the existing KTMB’s businesses,” he said.

KTMB recorded RM8.9 million in profit in 2016, RM4.4 million (2017) and RM19.45 million (2018), largely from asset disposals.

The company carried 38.1 million passengers last year compared to 32 million recorded in 2018.

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