Govt to seek out-of-court settlement with Dhaya Maju-LTAT on KVDT2 contract termination

Govt to seek out-of-court settlement with Dhaya Maju-LTAT on KVDT2 contract termination
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This story has been updated for accuracy.

KUALA LUMPUR (Nov 11): The government will pursue an out-of-court settlement with Syarikat Dhaya Maju-LTAT Sdn Bhd regarding the termination of the latter's contract for the Klang Valley Double Tracking Phase 2 (KVDT2) project.

Datuk Takiyuddin Hassan, who is Minister in the Prime Minister's Department in charge of law, said in Parliament today the government is willing to negotiate an out-of-court settlement with Dhaya Maju-LTAT.

"This was discussed [with the Transport Ministry] last Friday," Takiyuddin said.

He said the government is seeking a win-win situation with the contractor and wants to avoid dragging out the matter through a tedious court process.

Takiyuddin was responding to a question by former transport minister Anthony Loke (Pakatan Harapan — Seremban) during question time today.

Dhaya Maju-LTAT filed a suit against the government in September to stop the Perikatan Nasional government from terminating the contract. The company claimed that the government had no legitimate basis to terminate the project, which is worth almost RM4.47 billion.

Dhaya Maju-LTAT is a 80:20 joint venture between privately held construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA) and Lembaga Tabung Angkatan Tentera (LTAT).  

The KDVT2 rehabilitation job scope includes replacement of the existing 25-year-old tracks besides electrification system and upgrade and maintenance. The project involves two KTM railway tracks — one from Salak South to Seremban and the other from a point between Kuala Lumpur Sentral and Angkasapuri to Port Klang.

To recap, Dhaya Maju–LTAT was first appointed the contractor for the KVDT2 project by the Barisan Nasional (BN) government in April, 2018, shortly before the 14th General Election. The original contract value was RM5.265 billion. 

Months later when Pakatan Harapan (PH) formed the government, the contract was terminated on the grounds that it was overpriced and was awarded via direct negotiation.

However, Loke, who was the Transport Minister then, re-awarded the contract back to the joint venture but at lower value 10 months later in July 2019. The value of the new contract was reduced to RM4.475 billion, 15% lower than its original RM5.26 billion contract value.

A year later, the current government terminated the contract.

Transport Minister Datuk Seri Dr Wee Ka Siong said the ministry would reopen the tender for the KVDT2 project after the termination of contract that was awarded to Dhaya Maju-LTAT.

He claimed that the contract was terminated after taking into consideration the results of extensive study and investigations which found that the cost of the said project under Dhaya Maju-LTAT was overpriced, despite the PH government having already reduced the cost by 15%.

Wee quoted a study done by Transport Ministry-assigned consultant Opus (a subsidiary of Khazanah Nasional Bhd) which concluded that the project actually cost was at RM3.4 billion based on Dhaya Maju-LTAT's original scope of work.

However, Dhaya Maju–LTAT claimed that the government had no reason to terminate the contract as it was unaware of the study.

Kathy Fong and Lam Jian Wyn