By Khairie Hisyam
On Friday, Sept 4, public transport operator Prasarana Malaysia finally made a much anticipated announcement: the project delivery partner (PDP) award for the proposed RM9 billion third extension of the Light Rail Transit (LRT3). However the award, confirming much preceding speculation, raises eyebrows.
Last Friday Prasarana announced the winner of the bidding for the LRT3 PDP job: the joint venture between Malaysian Resources Corporation Berhad (MRCB) and George Kent (M) Berhad.
This means the duo accomplished an incredible feat in edging out five other reported contenders including parties with more substantial track record for such a job. Given recent history and controversy concerning George Kent in particular, the news raises many questions.
One curious point is that George Kent surmounted what seems incredible odds in the job win after much controversy over its previous appointment of overall systems integrator for the RM1 billion Ampang LRT line extension.
To recap, a part of the controversy over the July 2012 appointment was an alleged failure on George Kent to pass both the competency and commercial evaluation for the contract, according to critics including Pandan member of Parliament Rafizi Ramli.
“George Kent has not only failed financially, but worse, it got one of the lowest [scores] when it came to technical competence,” he told the media in July 2012, citing a technical evaluation report on bidders for the job.
According to the document produced by Rafizi, the consultant evaluating the bidders found that the George Kent joint venture for the Ampang LRT job would not be able to “successfully deliver”, among others citing a lack technical experience as well as an absence of any previous rail-related experience — the company had not undertaken any projects worth more than RM40 million at that point.
Fast forward three years later, chairman Tan Kay Hock said he expects a one-year delay due to factors beyond either the company’s or Prasarana’s control. “
Tan Kay Hock
We may incur extra expenditure because of the delay but we don’t know for certain,” he told the media on June 30 this year.
To be fair however Prasarana denies any such delay issues on July 3. “We are very confident that we can meet the timeline,” said Prasarana group director of project development Zohari Sulaiman to media.
If George Kent failed both the competence and commercial evaluation for the Ampang LRT job, questions hang heavily on why they were appointed anyway. In this context the LRT3 PDP award raises further questions.
The LRT3 PDP award is not an insubstantial contract for MRCB-George Kent – the joint venture stands to earn 6% of the total cost as management fees subject to the fulfilment of certain terms. That comes to RM540 million in maximum fees.
In getting there however MRCB-George Kent somehow finished ahead of other notable contenders. Two things immediately stand out — not only did George Kent not have any substantial projects of comparable scale to the job apart from the controversially awarded Ampang LRT project, but the appointment for LRT3 PDP seemed to disregard a self-admitted delay for that project’s execution which logically should give pause to further job awards.
For one, the MMC Corporation-Gamuda partnership was also reportedly in the running, boasting the relatively smooth execution of its PDP role for the Klang Valley Mass Rapid Transit (MRT) project. Gamuda also boasts leading expertise in underground tunnelling works though whether or not this is relevant for the LRT3 job is unclear.
Another interesting contender was a consortium led by Khazanah-owned infrastructure group UEM Group, who is partnering global railway system contractor Colas Rail Asia and which is rumoured to have even procured the pledged cooperation of the Selangor government for the project. UEM Builders have also successfully undertaken numerous LRT construction job packages previously through its construction arm UEM Builders.
A third contender, Naza Group, for instance, partnered China-based CSR Zhuzhou Electric Locomotive Co Ltd for the bid. A major global rail player, the latter set-up a RM400 million rolling stock manufacturing and maintenance plant in Perak in 2013 and the partnership reportedly even offered to go beyond the PDP role by financing up to 90% of the LRT3 extension works – whether this is viable or not is uncertain to the public.
The other two reported finalists for the PDP award were Sunway Berhad and a partnership between WCT Berhad and AlloyMtd.
These considerations, coupled together with the albatross over George Kent’s neck that is the Ampang LRT appointment-and-delay controversy, raises grave concerns over the decision-making process. Was the job award a political decision?
It would do much to allay concerns of hidden hands partaking in the award if Prasarana would come clean on the merits of the award and explain in detail to the public why MRCB-George Kent was the best contender for the job.
Did they outperform other candidates in technical evaluation? Did their proposal made the most commercial sense? Were there overriding concerns on the other contenders’ capabilities?
Otherwise this seems another controversy just waiting to explode like the last time George Kent mysteriously won a big LRT job.
GRRRRR!!!
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