Ninth Malaysia Plan should ban rip-offs and leakages caused by exorbitant overpricing  of contracts like the RM650 million Sentul-Batu Caves Double Track project which is 55% higher than RM420 million bid agreed three years ago before it was suspended

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Press Statement (3)

by Lim Kit Siang  
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(Parliament, Wednesday) : During the ministerial winding-up of the Ninth Malaysia Plan debate today, I asked the Transport Minister Datuk Chan Kong Choy what steps had been taken to ensure that there would be  no rip-offs and leakages  caused by exorbitant overpricing of contracts in the transport sector in the next five years.

Under the Ninth Malaysia Plan, RM30.3 billion is allocated to the transport sector, comprising:

If there is a leakage of 10 per cent in the transport sector under the Ninth Malaysia Plan as a result of extravagance, contract rip-offs or corruption, this will mean a loss of RM3 billion – although there are those who say that 10% leakage is too conservative and that a more accurate figure will be in the region of 30% or some RM9.9 billion!

I sought clarification from Chan on the Sentul-Batu Caves Double Rail Track project, which had ballooned to RM650 million – or 55% higher than the RM420 million bid agreed three years ago before the project was suspended.

I asked Chan why the 7.5 km Sentul to Batu  Caves high-speed line is now costing RM650 million, when independent valuers already found the RM420 million price agreed for the project in 2003 before it was suspended as too high as there were parties willing to do it for even less than RM350 million. 

At the price of RM650 million, the Sentul to Batu Caves Double Track will work out to about RM90 million per kilometer, more than four times higher than the cost of Ipoh – Rawang Double Track project which cost approximately RM20 million per kilometer, which is regarded as quite expensive at the time.

The sharp price increase was particularly unjustifiable as the new group of contractors which had been awarded the project had used the same designs/drawings of KL Consult, who were the consultants to DRB when the Government/KTM/DRB were in negotiations for the Sentul-Batu Caves Double Track project in 2003.

At first Chong sought to explain the reasons for the 55% jump of the price of the project from RM420 million to RM650 million in a matter of three years, attributing it to price increases in materials and expertise and their sourcing from Europe.

But when I asked why there was no open tender and who was the new contractor who had been awarded the RM659 million contract, Chan said he could not give me the answer as it had to be referred to the Finance Ministry, which was responsible for the project.

When I protested that it was outrageous that the Transport Minister could not tell who was the successful contractor for the RM650 million Sentul-Batu Caves Double Track project, Chan promised to check with the Finance Ministry and to give me a written answer.

I asked for the answer to be furnished tomorrow and I shall be pursuing Chan for the information. 

(26/04/2006)