Dhaya Maju LTAT wins back KVDT2 job, but contract value cut by 15%

Dhaya Maju LTAT wins back KVDT2 job, but contract value cut by 15%
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KUALA LUMPUR (July 9): Syarikat Dhaya Maju LTAT Sdn Bhd — an 80:20 joint venture between privately-held construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA) and Lembaga Tabung Angkatan Tentera (LTAT) — has won back the second phase of the Klang Valley Double Track (KVDT2) rehabilitation contract, 10 months after it was terminated.

Transport Minister Anthony Loke announced that his ministry will enter into a new contract with Syarikat Dhaya Maju LTAT, which will see the JV company undertaking the project at contract value that is 15% lower than the original RM5.26 billion — now at RM4.475 billion.

"Syarikat Dhaya Maju LTAT will be appointed as the contractor to carry out KVDT2 through another letter of acceptance and new agreement," he told reporters at Parliament lobby today.

The KVDT2 contract entails the rehabilitation of KTM Bhd existing railway track that stretches 110km.

The previous Barisan Nasional government had awarded the contract, valued at RM5.265 billion, to Syarikat Dhaya Maju LTAT on April 4 last year, just days before Parliament was dissolved to pave the way for the 14th general election.

Questions abound as no open tender called

The contract was terminated by the Pakatan Harapan government in September due to its high cost and the manner in which it was awarded via direct negotiation. A fresh tender was to be called, but it never came.

To this, Loke said the government’s decision to re-appoint Syarikat Dhaya Maju LTAT as the contractor for KVDT2 was to mitigate any legal implications of the contract termination to the government.

"The contract was already awarded to the contractor by the previous government in April 2018, just two days before Dewan Rakyat was dissolved. So, the contractor may sue us for cancelling the contract. The government's approach is the same as revived East Coast Rail Link (ECRL) project, whereby we are open for renegotiation, to reduce the cost for KVDT2,” he said.

Back in September, Loke had also said that the seven-year completion period given to the company was too long.

Thus, it is surprising that the minister announced today that the new contract period will remain at seven years.

His defence was that the duration would allow the government to spread the burden of the costs in terms of development expenditure in any single year.

Prior to the new contract, Loke said the government will first enter into a settlement agreement with Syarikat Dhaya Maju LTAT to ensure that the latter agrees not to make any claims for cost incurred from the cancellation of the KVDT2 rehabilitation project by the government. He added that the cancellation notice is effective Oct 19, 2018.

Asked when this would be, Loke said it can be entered into as soon as the next two months. "Soon, because they (Syarikat Dhaya Maju LTAT) are eager to sign the agreement as well".

Loke was responding during the minister's question time at the Dewan Parkyat today to a query by Ahmad Fahmi Mohamed Fadzil [PH-Lembah Pantai], who asked the Transport Ministry to state the current status of the KVDT rehabilitation project for both Phase 1 and 2, and the latest expenditure involved for both phases. He also asked about the government's efforts to address the challenges in which the quality of KTM Komuter and electric train service (ETS) will be affected when the KVDT projects are in progress.

Loke said as at June 30, Phase 1 of the KVDT project (KVDT1) was 80.33% completed, with total expenditure so far amounting to RM1.11 billion. This comprises RM959.46 million paid to the contractor, RM32.53 million paid to the independent consultant, RM50 million in deposits and the remaining RM70.5 million as implementation guarantee fund.

The KVDT1 project involves the rehabilitation of a 40km stretch from Rawang to Salak South. DMIA is undertaking this project, which is 75% completed, on its own.

For KVDT2, Loke said the government has spent RM42.35 million to date. This consists of RM38.12 million paid to the contractor and RM4.24 million as implementation guarantee fund.