KUALA LUMPUR: The government is planning to take legal action against Sunshine Fleet Sdn Bhd, which is owned by three members of the Selangor royal family and was the main contractor for the new Shah Alam Hospital, over cost overruns due to the company’s failure to deliver the hospital.

Public Accounts Committee chairman Datuk Nur Jazlan Mohamed said the Health Ministry will sue Sunshine Fleet for the amount of RM68.25 million being the additional costs for the construction contract, after the project was revived by Gadang Engineering (M) Sdn Bhd. 

“The latest is that the government is now suing Sunshine Fleet for the amount which is RM68.25 million, which is the cost overrun of the project,” said Nur Jazlan after chairing the committee’s meeting in the Parliament complex yesterday. The meeting was attended by representatives from the health and work ministries. 

Sunshine Fleet is 70%-owned by Tengku Puteri Arafiah, the Sultan of Selangor’s sister. 

The company was awarded the original contract to construct the 2,300-bed hospital in Seksyen 7, Shah Alam in November 2007 for RM491.6 million. However, as the dateline for the delivery neared in 2010, only 27% of the construction was done. 

Despite the non-delivery of the project, Sunshine Fleet was paid RM139.9 million by the government for the portion of the works done. The government later re-tendered the project and awarded it to Gadang Engineering in October 2011 for RM410.87 million. 

The project was supposed to be completed within 24 months, between Oct 19, 2011 and Oct 18, 2013. However, the new contractor requested for two extensions of time from the government, to March 31 this year.

In total, the project took seven years and four months to be completed, said Nur Jazlan. 

Asked what are the factors that have caused Sunshine Fleet to not be able to deliver the project, Nur Jazlan said the company did not have the capability to build such a specialised building.

He also confirmed that the contract was awarded to Sunshine Fleet via direct negotiation. 

“I think the issue here is about the original award of the contract by the Ministry of Finance to Sunshine Fleet ... whether the ministry awarded the contract to a company that was capable of carrying out the job,” he said.

This article first appeared in The Edge Financial Daily, on April 2, 2015.