In a bizarre turn of events, Sunshine Fleet Sdn Bhd - the main contractor for the Shah Alam general hospital project  - has asked the Public Works Department to halt disbursement of progress payments for work already completed on site.

This has slowed down construction of the Shah Alam General Hospital, complained Elvin Toh, the CEO of the primary subcontractor GMH Healthcare Sdn Bhd, adding that the project is already 25 days behind schedule.

NONE The subcontractors of the project were informed of the withholding of payment in a letter by PWD dated April 29, signed by PWD Health Works Division construction manager II Mohd Arif Abu Bakar.

Among others, Mohd Arif also revealed in the letter that the withholding of progress payments were donee upon the request of main contractor Sunshine Fleet.

Malaysiakini understands that PWD was acting on a letter dated March 25 by Sunshine Fleet executive chairperson Tengku Putri Arafiah Sultan Salahuddin Abdul Aziz, the sister to the Selangor Sultan.

Tengku Putri Arafiah was said to have told the PWD the withholding of payments were necessary for the company to allow time for negotiations with project bankers Bank Rakyat.

Stop work order

Toh told Malaysiakini last Friday that all subcontractors and suppliers have since been issued an official stop work order from GMH. He said that the order, issued on Monday, was indefinite.

With this, only a handful of workers are currently on site for maintenance and housekeeping works, while physical construction has stopped.

Toh said GMH has already paid out of pocket for suppliers and other subcontractors for work done up to April 30 and the company now fears that the withholding of payments by PWD would lead to other subcontractors and suppliers pulling out from the project.

Sources close to the project said that the “issues” faced by Sunshine Fleet revolved around the deed of assignments that have been executed by GMH and Bank Rakyat.

The deeds of assignment was initiated by GMH to ensure that all progress payments received from the PWD will be channeled to pay for interest on a Bank Rakyat loan to fund the project, as well as to pay for outstanding construction costs.

                    

The source speculated that the previous non-payments from Sunshine Fleet has caused the bank and GMH to take the drastic measures.

This led to Tengku Putri Arafiah writing a strongly worded letter to GMH and subsequently to the PWD, adamant that all progress payments be disbursed to Sunshine Fleet for distribution, insisting that the company is capable of handling the project’s finances.

‘Payments resumed’

However, Toh yesterday told Malaysiakini that after negotiations between GMH and top officials from the Works Ministry, the payments will be reissued by the PWD.

He hoped that the decision to disburse the overdue payments would help put the project back on track.

“Our whole intention is to complete the hospital and move on. There is no profit at all for this job, mostly because the money was already taken by Sunshine Fleet and the rest are financing costs,” he said.

However, he is concerned that the completion date of the project would still be affected due to the delays.

NONE The Shah Alam General Hospital was plagued with irregularities from the beginning. It was awarded to Sunshine Fleet through direct negotiation although it was suppose to be an open tender.

It is also alleged that the company does not have the expertise nor financial capital to run the project.

Last year, further complications ensued when the current subcontractor GMH again ran into financial disagreements with main contractor Sunshine Fleet over unpaid bills and added expenditures.