Gamuda, MMC bag $11.5 bln rail project -sources

By Min Hun Fong

KUALA LUMPUR, Dec 17 (Reuters) A joint venture between Malaysian builders Gamuda (GAMU.KL: Quote) and MMC (MMCB.KL: Quote) has received preliminary government approval to manage a 36 billion ringgit ($11.5 billion) rail project, sources with direct knowledge of the deal said on Friday.

The companies got approval to oversee the building of a 156-kilometre mass rapid transit project in the capital, Kuala Lumpur, and the surrounding areas after a weekly government cabinet meeting, said one source who declined to be identified.

Gamuda and MMC were not immediately available for comment.

"However, it's not certain whether Gamuda-MMC will also be awarded the tunnelling portion of the project," the source said, referring to the 14 billion ringgit drilling component of the project.

The rail system is part of a government plan to alleviate traffic congestion in the capital, and is expected to spur a slew of other building projects and contribute to economic growth.

Analysts expect the Gamuda-MMC venture to get the tunnelling job as they have had similar previous experience.

Local media had previously said the government was contemplating a "Swiss Challenge" model for the tunnelling project, where other parties are invited to put in bids that match or better Gamuda-MMC's offer.

Construction analysts said the market had not fully priced in the award of the contract into the companies' share price.