Dubious MRT awards will bloat project cost, says Pua
KUALA LUMPUR, May 6 — DAP MP Tony Pua took a swipe at the Najib Administration today for awarding MRT contracts to “crony” firms without first determining the contract value, claiming it’ll bloat the country’s most expensive infrastructure project.
In a statement today, the Petaling Jaya Utara MP pointed to how the role of Independent Check Engineer (ICE) had been given to HSS Integrated Sdn Bhd (HSSI) in a “cloak and dagger” fashion although MRT project owners Syarikat Prasarana Nasional Berhad (SPNB) had initially rejected the company’s bid after it failed to put a price to its brief.
Pua (picture) questioned why despite this, SPNB group director Zulkifli Yusoff had himself admitted during a media briefing yesterday that an engineering consortium led by HSSI had already been on board as the project’s ICE since February.
This, he said, was in contradiction to SPNB’s response on April 15 when group managing director Shahril Mokhtar had denied the contract award, claiming the appointment of the ICE was yet to be finalised and any speculation on its fee quantum would jeopardise the negotiation for competitive fees from other ICE candidates.
The Malaysian Insider had first broke the story on April 14, revealing that the SPNB board was to meet on that day to award the contract for two per cent of the undetermined project cost, likely to HSSI.
Concerns have been raised over the involvement of HSSI, moreover as it apparently had an existing working relationship with MRT project delivery partner (PDP), MMC-Gamuda, through the ongoing double-tracking rail project in north Malaysia.
“What is perhaps of greatest concern to Malaysian tax-payers is the fact that while an ICE should not have an existing relationship with the parties managing the project to ensure independence, HSSI has been the contracting engineers for Gamuda’s double-tracking projects.
“Furthermore, the speculated 2 per cent consultancy fee on the cost of the entire project, which has yet to be finalised, is substantially above market rates, understood to be in the region of 0.8 per cent,” Pua said in a statement today.
Should this fee quantum be offered, he added, the HSSI consortium would stand to pocket at least RM1 billlion in fees, RM600 million more than the estimated market value of RM400 million, granted that the MRT project costs about RM50 billion.
The project was at first estimated at RM36.6 billion but a study by CIMB Research found that it would likely cost an access of RM53 billion.
In another example, Pua noted that the Gamuda-MMC joint venture had been appointed as the MRT’s PDP, in much the same manner as HSSI.
He recalled that Prime Minister Datuk Seri Najib Razak had confirmed in Parliament on April 6 that the contract had been awarded with no price fixed, despite claims that the PDP will bear all cost-overruns on the MRT project.
“It is an oxymoron for Najib to argue that the PDP will bear all cost-overruns when its own project contract value has yet to be finalised, and may be increasing as we speak, as the cost of the MRT project has already ballooned from a budgeted RM36 billion to now, an estimated RM53 billion,” said Pua.
He added that both examples were clear examples of how the Najib Administration had failed to stick to its own promises of reform and transparency particularly over government procurement, as underlined in the Government Transformation Programme (GTP).
The GTP, said Pua, had taken into account Pemudah’s estimates that corruption could cost Malaysia as much as RM10 billion annually.
“The GTP even quoted a 2007 Survey by Merdeka Centre which revealed that 71 per cent and 54 per cent of corporates and public respectively perceives ‘no transparency and openness’ in the current procurement process or system used for awarding major government projects.
“Hence the GTP called to ‘disclose details of government procurement contracts’ and recognises the role of public scrutiny to increase accountability and reduce corruption and wastage,” he said.
If the government continued to employ dubious techniques to award government procurement contracts, said Pua, Malaysian taxpayers would likely find themselves overpaying for the MRT project.
“Given the nature and size of the project, Pemudah will need to come up with new and higher estimates on how much corruption and government wastage is costing our economy,” he said.