HOW can a company terminated for delays in an infrastructure project crucial to the country be allowed to return to the very same job?
The return of Pestech International Bhd, via its subsidiary, to the nearly half a billion ringgit KLIA aerotrain project has raised more than just eyebrows as the company already had several run-ins with Malaysia Airports Holdings Bhd (MAHB).
Who arm-twisted MAHB to accept Pestech back? And to add insult to injury at a higher cost?
These are reasonable questions in the ongoing KLIA aerotrain saga. The airport serves over 146,000 passengers a day. Between January and November 2023, KLIA recorded more than 42 million passengers.
Obviously, KLIA is a key revenue generator for the country and everything that goes on with it is a matter of public interest.
Hence, taxpayers have a right to know what was the justification for the return of Pestech Technology Sdn Bhd (Ptech) via a corporate backdoor. The move hardly demonstrates accountability or transparency as required in good governance.
Pestech has been in a legal wrangle with MAHB, since August 16 last year when the airport operator terminated the aerotrain contract with subsidiary Ptech.
The termination was due to Ptech’s failure to meet the stipulated project timeline and “substantial setbacks at crucial project milestones”.
Now, the same subsidiary is back in the game with a new partner.
With new project coordination lead Alstom Transport Systems (Malaysia) Sdn Bhd, MAHB will be shouldering the 15% cost increase amounting to RM456.1 million. Alstom Transport Systems also handpicked the Ptech and IJM Construction Sdn Bhd joint venture (IJMC-Pestech JV) to work with.
Scoop is made to understand that Alstom had insisted on Pestech’s involvement probably due to its familiarity with the project.
The question is why would MAHB as the client, allow itself to be dictated to by a contractor?
In a bourse filing today, the JV is involved with design, supply, install, testing and commissioning of the aerotrain and all the associated works at KLIA – with a price tag of RM175.65 million.
The job scope breakdown in the JV is 60% (IJMC) and 40% (Ptech), respectively – commencing January 15, 2024 and to be completed by March 31, 2025, or earlier.
On May 10 last year, Ptech was fired as a subcontractor for the Gemas-Johor Bahru electrified double-track rail project due to delays. Ptech, which had completed 70% of the project, has filed legal action, seeking an injunction, among others.
Interestingly, IJM Corp Bhd acquired a 44.83% stake in Pestech International for RM124 million or 15.5 sen per share in July 2023.
Ptech is not the only one with a past.
Alstom, the world’s second-largest rail rolling stock manufacturer, ran into trouble last November seeking to sell up to 1 billion euros in assets and cut at least 1,500 jobs. It also lost US$4.5 billion (RM21.2 billion) in market value this year, almost half its capitalisation.
Much of its financial troubles started from its 2021 acquisition of Bombardier, inheriting money-losing contracts, leaving Alstrom to struggle with inventory and production.
Last October, Transport Minister Anthony Loke said the new, improved and automated aerotrain is near completion and expected to be delivered to Malaysia this year. Operationally, the entire system is to be ready next year.
The aerotrain service connects KLIA’s main terminal building to its satellite terminal. For now, passengers are ferried between the two terminals by buses.
In March last year, MAHB said it had started the aerotrain replacement programme in 2022 as the original one was at the end of its life since it started some 25 years ago.
MAHB would need to monitor the new deal like a hawk to ensure KLIA has an aerotrain by 2025. – January 17, 2024