KUALA LUMPUR — Yesterday, Malaysia Airports Holdings Bhd (MAHB) terminated the contractor for the Kuala Lumpur International Airport (KLIA)’s new aerotrain.
According to MAHB, the RM742.95 million agreement awarded to Pestech International Bhd for the construction and provision of a new automated people mover (APM) was cancelled due to Pestech’s failure to meet the stipulated project timeline.
The project was awarded to Pestech in December 2021 following a competitive tender process, MAHB said in its statement.
“Pestech has been found to be in material breach of its obligations under the contract and has failed to remedy the same within the specified time period,” MAHB added.
While Pestech is expected to dispute this and seek recourse, this is not the first time the engineering and construction firm was fired from a job.
On May 10, its subsidiary Pestech Technology Sdn Bhd (PTech) was fired as a subcontractor for the Gemas-Johor Bahru electrified double-track rail project due to delays.
Main contractor Syarikat Pembinaan Yeoh Tiong Lay Sdn Bhd (SPYTL), the construction arm of the YTL Group, claimed PTech’s “insolvency” were among the issues that have caused the delay of the project since April 2021.
Pestech however had denied that its subsidiary is insolvent in a notice to Bursa Malaysia.
The RM399 million job included turnkey engineering, procurement, construction, and maintenance services.
PTech, which has completed 70% of the project has filed legal action, seeking an injunction, plus other remedies.
Pestech’s senior management has also been in the news for brushes with the law. Although they have since been cleared.
On July 17, Executive Chairman Lim Ah Hock and Managing Director and Group Chief Executive Lim Pay Chuan were acquitted and discharged by the Shah Alam Sessions Court for charges of misappropriation of company assets under the Penal Code.
The same court acquitted PTech Chief Executive Officer G.Paismanathan on various charges of money laundering and giving gratification with respect to the Mass Rapid Transit 2 (MRT 2) project, under the Penal Code; the Malaysian Anti-Corruption Commission Act 2009; and the Anti-Money Laundering, Anti-Terrorist Financing and Proceeds of Unlawful Activities Act 2001.
Last month eyebrows were raised in corporate circles when IJM Corp Bhd announced it is acquiring a 44.83% stake in Pestech International for RM124mil or 15.5 sen per share.
Analysts called for caution but IJM Corp chief executive officer and managing director Lee Chun Fai said its investment brings opportunities for both IJM and Pestech in the growing energy transmission and rail electrification sectors.
Whether this is still the case for IJM following Pestech’s loss of two major rail jobs, remains to be seen.
On Bursa, Pestech closed at 29 sen yesterday.
Scoop is awaiting comments from Pestech. — August 17, 2023