pic by TMR
THE Cabinet has unanimously agreed to reinstate a joint venture between Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA) and the Armed Forces Fund Board (LTAT) as contractors of the Klang Valley Double Tracking Phase 2 (KVDT2) project to avoid complications.
Transport Minister Anthony Loke (picture) said Dhaya Maju LTAT Sdn Bhd could seek reparation of up to RM2.5 billion for the termination of their contract, which was awarded by the previous government on April 4 last year, just two days before the dissolution of Parliament.
“DMIA has estimated that the reparation would be about RM2.5 billion, despite the figure has not been verified. The government’s stand is that we are open for negotiations and our main objective is to reduce the cost of the project.
“Upon negotiation, the companies have agreed to reduce the cost by 15% or RM700 million.
“We’ve taken a similar approach with other projects such as the East Coast Rail Link, Mass Rapid Transit and the Light Rail Transit 3.
“It is for this reason that the Cabinet decided to grant them a second chance as contractors of the project,” Loke told the Dewan Rakyat yesterday.
He said this during the Ministers’ Question Time in response to a question by Fahmi Fadzil (Pakatan Harapan-Lembah Pantai) on the status of the KVDT rail upgrading project.
The KVDT project involves the rehabilitation of KTM Bhd’s (KTMB) railway tracks in the Klang Valley, which are over 25 years old.
It also includes the upgrading of 16 stations and the electrification system of the overall network.
The RM1.41 billion KVDT1, covering Rawang to Salak South, is undertaken by DMIA after having secured
the project in 2016. As of June 30 this year, the first phase of the project is 80.33% complete.
On the other hand, the KVDT2, which involves a line from Salak South to Seremban and between Kuala Lumpur Sentral and Port Klang, was valued at RM5.27 billion.
The KVDT2 was initially awarded to DMIA in partnership with LTAT via direct negotiations just days before the 14th General Election (GE).
Following the GE, the project was cancelled after a review due to its high costs and the manner it was awarded.
Loke announced that the Cabinet last Friday decided to reappoint DMIA and LTAT, and that both companies have agreed to pursue the project at a new cost of RM4.48 billion, which is a 15% discount from the original cost.
Loke said apart from legal implications, the discontinuation of the contract with DMIA and LTAT could have a negative impact on the earnings of LTAT.
“If we do not resume the contract with the company, the government will face legal implications in which the company can sue the government and claim about RM2.5 billion in compensation,” he said.
Loke added that the Cabinet had taken into consideration the views of KTMB to ensure that the contractors would be able to do their part more efficiently.
It was reported that KTMB CEO Mohd Rani Hisham Samsudin, in a letter dated Feb 21 to Finance Minister Lim Guan Eng, had expressed dissatisfaction with DMIA’s performance on the KVDT1.
The national railway company claimed that DMIA had caused disruption to its train operations which have resulted in a decline in passenger volume.