Under spotlight for direct negotiation deals, Putrajaya to reopen tender for RM4.47b Klang Valley double tracking project

Transport Minister Datuk Seri Wee Ka Siong speaks during a press conference at Parliament in Kuala Lumpur July 15, 2020. — Picture by Miera Zulyana
Transport Minister Datuk Seri Wee Ka Siong speaks during a press conference at Parliament in Kuala Lumpur July 15, 2020. — Picture by Miera Zulyana

KUALA LUMPUR, Aug 28 — The Cabinet has agreed to reopen the tender for the RM4.47 billion Klang Valley Double Tracking Phase Two (KVDT2) project that recently came under the spotlight for its award via direct negotiations, Minister of Transport Datuk Seri Wee Ka Siong said today.

He said this is in the interest of optimising the use of public funds for large-scale infrastructure projects, and that the government has closely scrutinised the viability of such projects to gain the best value for the country.

“Previously a Cabinet decision by the then-Pakatan Harapan government on July 5 last year had agreed to continue the said project with contractor Dhaya Maju LTAT Sdn Bhd (DM-LTAT) at a 15 per cent reduced cost from RM5.265 billion, with reduced scope of work to RM4.475 billion, which is RM789.750 million,” Wee said in a statement.

Dhaya Maju LTAT is a joint venture between private company Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA) and the Armed Forces Fund Board (LTAT).

The Barisan Nasional administration had awarded DMIA the RM1.41 billion first phase of the KVDT project (KVDT1), and subsequently Dhaya Maju LTAT for KVDT2 in 2018 just before the general election.

Former transport minister Anthony Loke said earlier this week that the Pakatan Harapan government had in September 2018 decided to cancel the contract, with the Transport Ministry serving the cancellation notice to Dhaya Maju LTAT.

Loke said the company then pleaded with the government several times, including directly to the prime minister, appeals that eventually resulted in renegotiations.

Wee said today that in October 2018, ministry-assigned consultant Opus, a subsidiary of Khazanah Nasional Bhd, then submitted a Professional Review Report which concluded that the project actually costs RM3.398 billion based on DM-LTAT’s original scope of work.

“This information was never made available to the Cabinet at the time. After taking into consideration the results of extensive study and investigation, the ministry has determined the current project’s cost is overpriced.

“As such, the Perikatan Nasional Cabinet has agreed that continuing with the implementation of the project based on direct negotiation is untenable,” Wee said.

Following this, the minister added that it is now prudent to reopen the bidding process via an open tender system following the proper procedures, instead of via direct negotiation as done previously.

“An Independent Checking Consultant will be appointed initially before a new contractor is appointed via open tender to carry out the required scope of work, in order to shorten the construction period of the project from seven to five years.

“This is important in view of the urgency to complete the project to serve an estimated 80,000 daily commuter riders,” Wee said.

 

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