The government has terminated DRB-Hicom's services for its RM2.6 billion part in the electrified double-tracking rail project but is going to foot the bill for a RM700 million variation order (VO) claim by the company.

Parliamentary Opposition Leader Lim Kit Siang wants to know why.

The Ipoh-Rawang rail project was awarded to the company in July 2000. The government has not stated its reasons why DRB-Hicom's services have been terminated but Lim alleged that it was because of the VO claim.

Second Finance Minister Nor Mohamed Yakcop yesterday confirmed that the company has been paid off for all its contractual dues except for the VO.

The 180km stretch entrusted to the company for completion, as of April 30 this year, has only had 88 percent of the work concluded.

In a statement today, Lim wanted an explanation from Transport Minister Chan Kong Choy as to why the company should be paid the amount if UEM World Berhad, a sub-contractor of the DRB-Hicom project, is going to take over the contract's unfinished 12 percent work at RM1.1 billion.

Lim submitted that Malaysians must find it strange and inexplicable that the government had initially refused to honour DRB-Hicom's RM700 million VO claim - which is said to have ensured the project's timely completion - but is now prepared to recognise the claim if UEM takes over.

"Parliament and Malaysian taxpayers are entitled to a full explanation from Chan on the government's extraordinary position to pay for the whole VO if the contract is taken over by UEM at a cost of RM1.1 billion - (which is) inclusive of the disputed RM700 million - for the balance of the contract," he asked.

Shadow of former minister

The project was one of the first tasks Chan assumed after taking over the transport ministry in mid 2003. The project had already been two years behind the original schedule at that point.

"A week after the government had removed DRB-Hicom as main contractor of the project, the country is none the wiser about the whys and wherefore to (Chan's) biggest failure in his two-year stint as transport minister as well as the biggest Project Management Consultant failure to date," said Lim.

In September 2003, Chan announced a 'fast track' programme to complete the stretch before October 2005. This would allow the new train service to commence the following year.

"Chan's fast track programme was even slower that (his predecessor) Dr Ling Liong Sik's stewardship. In 39 months from July 2000 to Sept 2003, some 72 percent of the project was completed. However - in the 21 months under Chan - only 16 percent was completed.

"When Chan took over, the project was two years behind schedule. Now, there is a four-year delay with the project's total cost of RM4.6 million ending up costing over RM6 billion" added Lim.

He broke down the project costs as follows:

  • RM2.6 billion on civil works and infrastructure works to DRB-Hicom.

  • RM1.9 billion on systems works awarded to Mitsui & Co transport system.

  • RM450 million on VO to Mitsui & Co (as reported in the media)

  • RM1.1 billion on project completion to UEM (including DRB-Hicom VO as claimed by Lim)

    • This will bring the total cost of the project to RM6.1 billion.

    Contacted today, Lim said he has more to reveal on the shoddiness and secrets surrounding the project and will bring this up when Parliament reconvenes on June 20. He said he expects proper explanations from the government.

    UEM World Berhad is formerly known as UEM Group - which was taken over by government investment arm Khazanah Nasional Berhad in 2001.