ICT and telecommunications firm Obnet Sdn Bhd is suing the Selangor state government to the tune of RM681 million for what it claims is breach of contract.

This, the firm claimed, is to cover losses it allegedly incurred because of the failure of the state government to follow through with a service agreement signed in 2005 to develop, deliver and commission the statewide broadband project dubbed Selnet.

A writ of summons was filed at the Shah Alam High Court on May 17 by S Murthi & Associates, lawyers acting on behalf of Obnet.

Obnet is seeking RM681 million to cover its losses as well as other relief that the court may find fitting.

NONE Selnet, better known as the Bandwidth Services of Selangor Net Broadband project was mooted during the tenure of former MB Khir Toyo ( right ) and was supposed to link all state agencies, departments and organisations in a statewide broadband network.

According to the service agreement, the firm alleged that the state was supposed to ensure that 345 state agencies, companies and organisations sign up to become customers of Selnet for a 20-year term.

The subscription fee from the subscribers was supposed to cover the high cost of developing the broadband network borne by Obnet and financed via loans from an Islamic bank.

State ‘failed to deliver customers'

However, the firm claimed that the state government has failed to deliver the promised 345 customers and have exhibited a reluctance to follow through with the terms of their contract and have continued to ‘frustrate' the completion of the project and Obnet's attempts at finding a solution via several discussions.

To date, the firm claimed that only 20 clients have signed up out of the total 345 promised, mainly due to the state's failure to instruct the parties in question to subscribe.

This, the firm claimed, has resulted in losses amounting to the total amount they are claiming, from the non-delivery of subscribers and the millions of its own money already sunk into the project.

A representative of the state government, when contacted, confirmed that there is a legal dispute with Obtech over the matter but said that more comments might not be forthcoming as this is now a court case.

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