The first official task of new prime minister Abdullah Ahmad Badawi should be to explain the award of a lucrative double-tracking rail project to a local consortium despite Malaysia's undertaking with two other governments last year.

Indian Railway Construction Co (Ircon) and China Railway were initially promised the project under a government-to-government initiative, which includes a barter deal to increase exports of palm oil to India and China.

Both quoted a bid of RM42 billion but later reduced it to RM24 billion. They were then given letters of intent to lay and electrify 636km of tracks in two packages covering the northern and southern stretches.

The mega-rail project, straddling the length of Peninsula Malaysia, is part of the US$30 billion trans-Asia railway line between Singapore to China.

However, both lost to latecomer Gamuda Bhd-Malaysian Mining Corporation Bhd consortium. Last week it announced the winning contract for RM14.5 billion.

Many questions

DAP chairperson Lim Kit Siang said the award raised many questions, especially the 'revocation' of a government-to-government deal for the country's single largest privatised infrastructure.

"Were the Indian and Chinese consortia given the opportunity to match the Gamuda-MMC bid bearing in mind that Malaysia had awarded letters of intent to these contractors last year?

"Was the last-minute rush to issue the letter of award to Gamuda-MMC, thus effectively cutting off involvement of both India and China, to present a fait accompli to Abdullah?

Lim said Abdullah had told Indian High Commissioner Veena Sikri when approached last week that he would look into the matter.

Both Ircon and China Railway were subsequently offered sub-contracting jobs by the Gamuda-MMC consortium but both reportedly turned down the offer.

The mega-rail project is targeted for completion in 2008.

The veteran opposition leader thinks that the decision by just-retired premier Dr Mahathir Mohamad could become a full-blown diplomatic crisis between Malaysia and both India and China.

"Will this be the first test of mettle for Abdullah as PM in demonstrating fairness and transparency to overrule his predecessor's decision?"

Mahathir had reportedly, on the eve of his retirement, shrugged off India's apparent unhappiness over the award of the mega-rail project to a local group.

Facts and particulars

Lim said there was no reason for Malaysia to provoke new diplomatic furores with more countries such as India and China over the mishandling of such G-to-G undertakings.

"For a start, the government should table a ministerial statement in Parliament tomorrow to present the facts and particulars leading to the award of the project, including the circumstances leading to the sidelining of (diplomatic) undertakings through letters of intent."

Meanwhile, top guns in state-owned Keretapi Tanah Melayu Bhd (KTMB), the ailing national railway company, claim to be in the dark over the privatisation deal.

Gamuda-MMC had also disclosed during last week's announcement that it would be managing the privatisation of KTMB following a failed attempt and huge losses amounting to millions of ringgit.

The railway company was corporatised in 1992 but remained in government control pending successful privatisation.