(Updated)

LRT3 contractors under financial stress as Prasarana has not paid for work done since July

LRT3 contractors under financial stress as Prasarana has not paid for work done since July
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KUALA LUMPUR (Dec 31): Prasarana Malaysia Bhd is believed to have withheld payment of more than RM700 million that is owed to 17 contractors and consulting firms for the Light Rail Transit 3 (LRT3) project. 

According to a jointly signed letter to Prime Minister Tan Sri Muhyiddin Yassin, Ministry of Finance (MoF) and Ministry of Transport (MoT) dated Dec 20, the 17 firms said Prasarana had not paid them since July. 

As of October, the contractors were owed RM700 million, and after taking into account work done in December, this amount would exceed RM1 billion

The reason Prasarana delayed the payment to contractors is not known. However, the delay in payment has pulled many contracts and their subcontractors deeper into financial problems as a result of tight cash flow. 

Given the financial stress, these 17 contractors have together appealed to and sought help from the government. 

“Tan Sri, in order to meet the project deadlines set by Prasarana, we have tried our best to fund the works with our own internal funds. However, we cannot continue to do so as the outstanding sum is quite large. 

“The current conditions have placed pressure on our finances and have impacted the progress of this project,” read the letter. 

The letter stated that the 17 contractors are currently under pressure from subcontractors, suppliers and other relevant stakeholders to make the relevant payments in the respective stipulated time frames. 

The LRT3 project measures 37 km in length and spans 20 stations between Johan Setia, Klang and Bandar Utama.

Among the signees of the letter are MRCB George Kent Sdn Bhd (a joint venture between Malaysian Resources Corp Bhd and George Kent (M) Bhd), WCT Bhd, Sunway Construction Bhd unit Sunway Construction Sdn Bhd, Mudajaya Corp Bhd and Emrail Sdn Bhd.

The Edge is in the midst of contacting MoT and MoF to confirm the receipt of the letter addressed to the respective ministries.

It is worth noting that Pasir Salak member of Parliament Datuk Seri Tajuddin Abdul Rahman, who is also member of Umno supreme council, was appointed chairman of Prasarana in May to replace Tan Sri Zaharah Ibrahim.

The Edge weekly reported that Prasarana's chief executive officer Muhammad Nizam Alias, who took over the office in July, has been suspended from duty. The show-cause letter sighted by The Edge stated that Nizam showed signs of insubordination when the board and chairman instructed him to investigate MRCB George Kent.

Nizam was previously the group's chief operating officer and succeeded Datuk Mohamed Hazlan Mohamed Hussain following the latter's resignation in January.

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Kathy Fong