KUALA LUMPUR – Malaysia Airports Holdings Bhd (MAHB) has inked an agreement for its aero train replacement with a joint venture that includes Pestech Technology Sdn Bhd, despite having had previous disputes with its parent company, Pestech International Bhd.
In a statement today, MAHB said that for the purpose of steering the aerotrain replacement project back on track, it has entered into an agreement with Alstom Transport Systems (Malaysia) Sdn Bhd and a joint venture featuring Pestech Technology and IJM Construction Sdn Bhd (IJMC-Pestech JV).
The new contract with Alstom as original equipment manufacturer is expected to incur a cost increase capped at 15%, bringing the project cost to RM456.1 million, MAHB said.
“The increase is attributed to interest holding costs, foreign exchange considerations, remobilisation expenses as well as project coordination fees to Alstom.”
Alstom will be the project’s coordination lead and be responsible for the delivery of three new trains and two lines by the first quarter of 2025.
As part of the agreement, Alstom was given the prerogative to select its partners for works outside their scope, and selected the IJMC-Pestech joint venture for work scopes involving civil engineering and train power supply components, among others.
Alstom will take up the majority of the scope of work in the project, MAHB said.
Alstom’s Singapore & Malaysia Cluster managing director Yann Maixandeau was quoted as saying: “We are glad to resume work on this important national project in partnership with MAHB and IJMC-Pestech JV.
“Our team is committed to overcoming challenges, ensuring timely delivery and enhancing the travel experience at the Kuala Lumpur International Airport (KLIA).”
MAHB acting group chief executive officer Mohamed Rastam Shahrom, meanwhile, said the project’s cost increase is an “acceptable variance” to get the aerotrain service back on track.
The service connects KLIA’s main terminal building to its satellite terminal. For now, passengers are ferried between the two terminals by buses.
MAHB began its aerotrain replacement programme in 2022 as the original aerotrain was at the end of its life since it started some 25 years ago.
On August 16, MAHB’s unit Malaysia Airports (Sepang) Sdn Bhd (MASSB) cancelled the RM742.95 million agreement awarded to Pestech International in December 2021 for the construction and provision of the aerotrain, as the company failed to meet the stipulated project timeline.
“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 said in a previous statement then.
The decision to terminate the contract had stemmed from various factors, notably Pestech International’s inability to fulfil its obligations, resulting in substantial setbacks at crucial project milestones.
Among others, MAHB said the termination is due to the company’s non-performance, which compromised significant project milestones and risked delays in delivering the project within the required deadline.
Two days after the agreement cancellation, it was reported that Pestech International had submitted a Bursa Securities filing stating its position that the termination is “misconceived and invalid.”
The company said that it firmly disputes the termination as stipulated in the termination notice and will enforce its legal rights, if necessary, but would rather seek a civil resolution with MAHB’s wholly owned subsidiary, Malaysia Airports (Sepang) Sdn Bhd (MASSB). – January 17, 2024