MAHB terminates Pestech as KLIA aerotrain contractor, citing non-performance
theedgemalaysia.com
16 Aug 2023, \
KUALA LUMPUR (Aug 16): Malaysia Airports Holdings Bhd has terminated the contract awarded to Pestech International Bhd to supply aerotrains for the Kuala Lumpur International Airport (KLIA), confirming a report by The Edge that the airports operator intends to revoke the RM742.95 million deal.
“The termination is due to, amongst others PTSB’s [Pestech Technology Sdn Bhd] non-performance, compromising significant project milestones and risking delays to deliver the project within the required deadline.
“PTSB has been found to be in material breach of its obligations under the contract and had failed to remedy the same within the specified time period,” MAHB said in a statement to Bursa Malaysia on Wednesday (Aug 16).
MAHB said its wholly-owned unit Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) issued the notice of termination of the automated people mover (APM) or aerotrain project to Pestech's wholly-owned subsidiary Pestech Technology Sdn Bhd (PTSB).
The airports operator said the decision was taken in adherence to its principles of governance and based on rigorous monitoring of the progressive development of the APM project by the group's management and its independent consultants.
PTSB was appointed by MA Sepang as the design and build contractor for the KLIA Aerotrain Replacement Programme on Dec 14, 2021, through an open tender process.
Following the notice of termination, which was preceded by a notice of default to PTSB, MAHB said MA Sepang can proceed to recommence and complete the works through the engagement of other relevant parties with a focus on ensuring the project is completed on schedule.
“MAHB remains committed to assign the necessary resources in order to minimise any potential delays to the APM project. With immediate effect, MA Sepang will expedite consultation and discussions with all existing stakeholders who are presently involved in the APM project for continuity and to mitigate any delays,” the group said.
This includes working closely with all relevant parties involved in the replacement project of the train’s tracks and system, as well as identifying an experienced and credible third-party contractor to ensure consistent progress of all project components.
When Pestech was awarded the aerotrain job in December 2021, the troubled engineering outfit said the contract was under Option 2, which included financing as well as operation and maintenance of the facility from March 14, 2025 to Feb 11, 2034.
Notably, the aerotrain contract was the biggest win for Pestech since its listing on Bursa Malaysia. It is understood that Pestech then was willing to have a deferred payment scheme that was spread over 15 years. With this, MAHB would not incur front-loaded large capital expenditure for the aerotrain service.
Shares in Pestech closed down 2.5 sen or 7.94% to 29 sen on Wednesday, valuing the group at RM282.95 million. Meanwhile, MAHB settled unchanged at RM6.89 with a market capitalisation of RM11.5 billion.
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