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Malaysian IJM Contract Termination Likely Due to Deadline Issue

Infra News - Published on Wed, 17 Jul 2019

Image Source: thestar.com.my
The Star reported that nothing seems certain in corporate Malaysia, especially when it comes to contracts on the award of jobs. Some contracts awarded under the previous government that was initially perceived to be up for grabs have been given back to the original contractors. The latest is the multi-billion-ringgit Klang Valley double track phase 2 project where the contract has been reinstated to the original contractors, a JV between Dhaya Maju Infrastructure Sdn Bhd and Lembaga Tabung Angkatan Tentera at a reduced price of RM4.475bil. The announcement by Transport Minister Anthony Loke put to rest a 10 month period of uncertainty with regard to the project that was awarded to the joint venture by the Barisan Nasional government a week before parliament dissolved.

In reinstating the job to DMIA-LTAT, the minister stressed on the sanctity of contract that the government had to honour in considering termination of old contracts.

Earlier this week, IJM Corp Bhd said its RM1.12bil contract for underground works on the light rail transit line 3 project had been terminated. IJM said its unit IJM Construction Sdn Bhd had received the notice of termination from MRCB George Kent Sdn Bhd on July 8. IJMC had been awarded the contract on March 13, 2018. Preliminary work had commenced before the project was suspended in June 2018.

It said that “IJMC is currently consulting its advisers and will seek appropriate legal redress under the contract.”

In line with the lower cost of the entire LRT 3 project that was scaled down to RM16.6bil from RM30.2bil, the portion that was to be done by IJM had been reduced substantially.

According to sources, the contract was reduced to about RM520mil as there is no underground station involved. It is learnt that both parties have agreed on the pricing. However, the timing to complete the project is said to be an issue.

Sources said that MRCB-GK felt there was no firm commitment from IJM Corp to complete the project within the stipulated time – estimated at two and a half years.

Sources tell StarBizWeek, said that “However IJM Corp contends that timing is not an issue and it could meet the deadline as the tunnel does not require a completely new tunnel-boring machine (TBM). It needs a letter of award to start work.”

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Posted By : Mohan Sharma on Wed, 17 Jul 2019
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