Pua: Explain contradictory reports on cost overruns
Published: May 22, 2012 11:55 AM | Updated: May 22, 2012 5:01 PM
Petaling Jaya Utara parliamentarian Tony Pua has demanded an explanation from the government on the “contradictory” reports regarding cost overruns in the Ipoh-Padang Besar Electrified Double-Track Project (EDTP).
The PJ Utara MP urges the Transport Ministry to probe a reported RM1.5 billion variation order for the double-tracking project.
Petaling Jaya Utara parliamentarian Tony Pua has demanded an explanation from the government on the “contradictory” reports regarding cost overruns in the Ipoh-Padang Besar Electrified Double-Track Project (EDTP).
Referring to a recent report by business dailies, Pua said MMC-Gamuda Joint Venture Sdn Bhd, as the main contractor for the project, will be submitting a RM1.5 billion variation order to the government for cost overruns in the RM12.5billion project.
This was later denied by MMC-Gamuda’s project director Paul Ha in a statement yesterday, saying “MMC-Gamuda’s claim will be in accordance with the terms as stated in our contract, but it is too early at this point to even determine the amount, but it is nowhere near RM1.5 billion.”
Ha, however, said the company will be seeking claims for “expenses and losses” caused by the government.
Pua (left), however, raised alarm bells, urging the Transport Ministry to get to the bottom of the matter as the RM1.5billion works out to a 12 percent increase in cost.
“These additional claims have raised fears and concerns that the Ipoh-Padang Besar stretch of the EDTP will suffer the same fate as the Ipoh-Rawang segment where the cost of the project increased from RM4.2 billion to RM6.6 billion, or by more than 50 percent,” he said.
The 2009 audit report highlighted on the management of the double tracking project from Ipoh-Rawang, following the change of contractors from DRB-Hicom to MMC-Gamuda in the middle of the project.
“Despite failing to complete works agreed in the contractual terms, the government had paid the DRB-Hicom consortium RM425million as compensation or settlement for the termination of the agreement.
‘Project delayed by more than five years’
“The Auditor-General had queried why the government had not claimed liquidated and ascertained damages (LAD) from DRB-Hicom for failing to carry out its obligations in a timely fashion,” Pua pointed out, which eventually caused the project to be delayed by more than five years.
Calling on Transport Minister Kong Cho Ha to explain the “truth” behind the contradictions, Pua said the ministry must investigate if MMC-Gamuda is “not attempting” to conceal “a possible variation order as an excessive expenses and losses claim” against the government.
Kong should be concerned about the project under his purview and seek the assistance of the Auditor-General to audit the project, warned Pua, as weaknesses could be identified and rectified immediately to prevent exponential cost overruns.
“We should not wait until the projects are completed at substantially higher costs and delays before the Auditor-General starts his audit. By then, like the case of the Ipoh-Rawang EDTP or the RM12.5 billion PKFZ mega-project scandal, it will be too late to prevent the abuse of the taxpayers’ funds,” he said.
Referring to a recent report by business dailies, Pua said MMC-Gamuda Joint Venture Sdn Bhd, as the main contractor for the project, will be submitting a RM1.5 billion variation order to the government for cost overruns in the RM12.5billion project.
This was later denied by MMC-Gamuda’s project director Paul Ha in a statement yesterday, saying “MMC-Gamuda’s claim will be in accordance with the terms as stated in our contract, but it is too early at this point to even determine the amount, but it is nowhere near RM1.5 billion.”
Ha, however, said the company will be seeking claims for “expenses and losses” caused by the government.Pua (left), however, raised alarm bells, urging the Transport Ministry to get to the bottom of the matter as the RM1.5billion works out to a 12 percent increase in cost.
“These additional claims have raised fears and concerns that the Ipoh-Padang Besar stretch of the EDTP will suffer the same fate as the Ipoh-Rawang segment where the cost of the project increased from RM4.2 billion to RM6.6 billion, or by more than 50 percent,” he said.
The 2009 audit report highlighted on the management of the double tracking project from Ipoh-Rawang, following the change of contractors from DRB-Hicom to MMC-Gamuda in the middle of the project.
“Despite failing to complete works agreed in the contractual terms, the government had paid the DRB-Hicom consortium RM425million as compensation or settlement for the termination of the agreement.
‘Project delayed by more than five years’
“The Auditor-General had queried why the government had not claimed liquidated and ascertained damages (LAD) from DRB-Hicom for failing to carry out its obligations in a timely fashion,” Pua pointed out, which eventually caused the project to be delayed by more than five years.
Calling on Transport Minister Kong Cho Ha to explain the “truth” behind the contradictions, Pua said the ministry must investigate if MMC-Gamuda is “not attempting” to conceal “a possible variation order as an excessive expenses and losses claim” against the government.Kong should be concerned about the project under his purview and seek the assistance of the Auditor-General to audit the project, warned Pua, as weaknesses could be identified and rectified immediately to prevent exponential cost overruns.
“We should not wait until the projects are completed at substantially higher costs and delays before the Auditor-General starts his audit. By then, like the case of the Ipoh-Rawang EDTP or the RM12.5 billion PKFZ mega-project scandal, it will be too late to prevent the abuse of the taxpayers’ funds,” he said.
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