In what appeared to be an open-ended reply, the government today added more confusion to the controversial railway project which has ruffled feathers at home and abroad ever since the multi-billion ringgit contract was awarded to a local consortium, reportedly past the deadline.

Minister in the Prime Minister's Department Dr Rais Yatim indicated in the Dewan Rakyat that the deal was "still negotiable pending a final decision based on the pre-conditions and competitiveness of the tender".

He was replying to a supplementary question when summing-up the mid-term review of the 8th Malaysia Plan on behalf of Prime Minister Abdullah Ahmad Badawi.

Rais, who is also de facto law minister, said the letter of intent was awarded on the work done as per the stipulated pre-conditions.

Asked to elaborate at a press conference at the Parliament lobby later, a reluctant Rais explained that the project details and feasibility report were among the important factors to be considered when awarding the contract.

"The Cabinet decided that the parameter of concern must be studied first, which includes the assessment of feasibility, cost-effectiveness, the source of funding as well as the benefits to the country," he said.

Asked to confirm if the railway contract was still open for bidding, he replied: "At this point in time, I do not wish to comment further."

Official replies in the Dewan Rakyat to related questions posed by several opposition MPs yesterday also failed to clear the controversy.

Sudden announcement

The storm began to brew after a sudden announcement last week by the local consortium - Gamuda Bhd-Malaysian Mining Corporation Bhd (MMC) - that it had been hired to build and electrify the 636-km double-tracking railway line.

The Malaysian route is part of a reportedly US$30 billion 5,500-km trans-Asia railway tracks linking Singapore and Kunming in China.

Both Indian and Chinese companies - Indian Railway Construction Co (Ircon) and China Railway Engineering Corp (CREC) - through a consortium called Keretapi Trans-Asia Bhd were given a letter of intent in mid-2002.

It has yet to be officially revoked, with the government repeatedly stating that the letter of intent was not a legally-binding document.

The decision sparked off fears of a bilateral trade and diplomatic fallout between Malaysia and its two major Asian trading partners, India and China, whose contractors failed the bid after reportedly submitting a figure much higher than the government's RM17 billion.

Gamuda-MMC won the bid at RM14.5 billion.

Subsequent to the announcement, media reports have provided varying, sources-based facts and figures. The government continues to remain silent on the details of the tender process.

Legally binding

Yesterday, the Star quoted industry sources in its top story 'No change seen in rail job award', saying that the letter of award to Gamuda-MMC on Oct 21 was a legally-binding contract, thus securing the major railway job.

It said the government had been fair in its dealings with Ircon and CREC as they "were offered the right to match Gamuda-MMC's RM14.5 billion price-tag".

"Both parties, however, declined the offer," stated the paper.

The report also said that both the Indian and Chinese companies had been notified about the contract to Gamuda-MMC one day before the award letter was issued.

The article could not be confirmed with the parties concerned.

DAP has demanded that Abdullah probe the alleged mishandling of the giant deal and clear the country's name to avoid an adverse reaction from foreign investors.

Yesterday, PAS submitted letters to the Indian and Chinese missions in Kuala Lumpur expressing concern over the deal.