MALAYSIA Airports Holdings Bhd (MAHB) has terminated the Pestech Technology Sdn Bhd (PTSB) contract for the KLIA automated people mover (APM) aerotrain project due various material breaches under the contract. 

In a stock exchange filing today, MAHB said its wholly-owned subsidiary Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) has officially issued a notice of termination to PTSB today.

The contract pertains to the contract involving the design, supply, installation, testing, and commissioning for the APM at KL International Airport (KLIA).

PTSB, a unit of Pestech International Bhd, was selected as the design and build  contractor for the KLIA Aerotrain replacement programme through an open tender process on December 14,  2021.

The tender was reportedly worth RM742.95 million.

“The termination comes as a result of PTSB’s non-performance, which has led to substantial disruptions in project milestones and the potential for project delivery delays within the required timeline.

“The decision to terminate was taken by MAHB’s Board of Directors following a thorough assessment of the APM project’s development progress, in line with stringent governance principles and oversight by independent consultants,” MAHB said.

MAHB said PTSB has been found to be in significant breach of its contractual obligations and has failed to rectify these breaches within the stipulated time frame.

In response, MA Sepang has initiated the termination process, allowing for the resumption and completion of the project by engaging alternative parties to ensure the project’s timely completion.

MAHB said it is committed to allocating the necessary resources to mitigate potential setbacks to the APM Project.

Immediate actions include accelerating consultations and discussions with all stakeholders currently involved in the project to ensure continuity and minimise any potential delays.

This, it said, involves close collaboration with entities responsible for replacing the train’s tracks and system, as well as identifying a reputable third-party contractor to maintain steady progress across all project aspects.

“This project is of significant importance to ensure the comfort and convenience of our passengers travelling through KL International Airport. Our focus moving forward is on the timely delivery of the aerotrain while observing stringent quality control and safety standards of the project, with no compromise to our operations and governance processes,” MAHB MD Datuk Sri Iskandar Mizal Mahmood said.

In a separate announcement, Pestech International said it is currently consulting its legal advisor and will seek appropriate legal redress under the contract.

“The termination of the project is expected to pose unfavourable financial effects to the group,”  it added

MAHB shares remained unchanged at RM6.89, while Pestech International counter fell 2.5 sen or 7.94% to close at 29 sen today. – TMR / pic MUHD AMIN NAHARUL