Malaysian Prime Minister Abdullah Ahmad Badawi said Wednesday the government stood firm over the award of a multi-billion dollar rail project to local contractors despite India's objections.

The project was initially promised to the Indian Railway Construction Co. (Ircon) and China Railway under a government-to-government initiative, which included a barter deal to increase exports of palmoil to India and China.

However, it was announced last month that the RM14.5 billion double-tracking rail contract had gone to local infrastructure group Gamuda Bhd and Malaysia Mining Corp Bhd (MMC).

"We discussed it. We are only obliged to offer the contract to those who offer the best cost," Abdullah told reporters after chairing his first cabinet meeting after taking over from former premier Dr Mahathir Mohamad.

Too high

Malaysia said bids by the Indian and Chinese contractors, reduced from an initial RM42 billion to RM24 billion, were too high.

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

The double-tracking is one of the country's largest infrastructure projects, involving the laying and electrification of 636 kilometers of track straddling the length of peninsula Malaysia and forming part of a 30 billion-dollar trans-Asia rail link. - AFP