KUALA LUMPUR – The contract for works on the aerotrain replacement project, awarded to a joint venture entity of Pestech Technology Sdn Bhd and IJM Construction Sdn Bhd (IJMC-Pestech JV) is worth a whopping RM175.64 million.
According to a filing with Bursa Malaysia today by Pestech Technology’s parent company Pestech International Bhd, it is understood that its subsidiary holds a 40% participating interest in the joint venture, while IJM Construction holds the other 60%.
It added that Pestech Technology had accepted a letter of award from Malaysia Airports (Sepang) Sdn Bhd (MASSB) on January 16 for works in relation to design, supply, installation, testing and commissioning for the aerotrain replacement project.
The letter of award also covers associated works at the Kuala Lumpur International Airport (KLIA) awarded to Alstom Transport Systems (Malaysia) Sdn Bhd and the joint venture.
“Alstom and IJMC-Pestech JV shall separately and independently carry out their respective scope of works.
“The commencement date of the project is January 15, 2024 and the completion date shall be March 31, 2025 or earlier,” it added.
It also asserted that the project will positively contribute towards the revenue and earnings of Pestech International in accordance with the agreed milestone events to be recognised in the financial years ending September 30, 2024 to September 30, 2025.
“Pestech does not foresee any exceptional risk other than the normal operational risk associated with the project, such as availability and changes in the raw material,” it said, adding that steps will be taken to mitigate risks as and when necessary.
It also stressed that none of the company’s directors, major shareholders or persons connected to them has any direct or indirect interest in the project.
Pestech International’s share price rose 5.26% to close at 30 sen today.
MAHB began its aerotrain replacement programme in 2022 as the original aerotrain was at the end of its life, having started some 25 years ago.
Earlier today, MASSB’s parent company Malaysia Airports Holdings Bhd (MAHB) announced that its agreement with Alstom and IJMC-Pestech JV is expected to incur a cost increase capped at 15%, bringing the aerotrain replacement project cost to RM456.1 million.
As part of the agreement, Alstom was given the prerogative to select its partners for works outside their scope, and selected the IJMC-Pestech JV for work scopes involving civil engineering and train power supply components, among others.
The agreement comes despite MAHB having had a previous dispute with Pestech International, as evidenced when 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 statement then.
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 MASSB. – January 16, 2024