Wednesday, December 9, 2009

PAC says rail project badly-managed

KUALA LUMPUR, Dec 9 — The Public Accounts Committee (PAC) has found no embezzlement in the double-tracking project, saying bad management has led to cost over-runs of RM1.14 billion.

The cost over-runs came from variation orders (VO) for the turnkey project without the approval from the Treasury.

“We have called up representatives from Transport Ministry, KTM, consultants including contractors that implemented the project. Our focus from PAC was to why there was a cost overrun of RM1.14 billion or 32.9 per cent higher than the original value of the project just reported in the AG report,”PAC chairman Datuk Azmi Khalid told reporters.

“Based on our findings, the PAC could not detect any misappropriation this time, although this project involves a double tracking project, implementation was not tidy and issues that will be raised to the government is to improve the standard operation procedures, complete the checklist properly, and look to whether the design and build could still be used or not,” he told reporters during a press conference in parliament.

According to this year’s audit report, the government may have to bear part of the RM1.14 billion loss in the RM6 billion double-tracking rail contract between Rawang and Ipoh, as the project was poorly managed.

He added that there were weaknesses in all levels of management in the project.

“The most obvious weakness was the delay in acquiring and utilisation of land. The problem was decision from the city halls which required deliberation and approvals. This has caused the project to be delayed which led to the increase in cost,” he said.

Azmi pointed out that the poor planning has incurred the project with unexpected costs.

“This project has two phases, infrastructure and system. The two have to be planned before hand but what happened was that the two was not planned before hand.

“Again there were requirements that were not seen in the earlier part because when you introduce new items it will cost more money. Delayed contracts also cost money to the contractors and suppliers. So there is money everywhere,” he said.

He also revealed that the VO in the double-tracking had cost RM588 million.

“We found that there was a VO of about RM588 million that was approved but not paid by the government and that also caused delay. The contractors have done their work but not yet paid,” he said.

The Rawang to Ipoh (southern) double-tracking and electrification project was completed in 2008, while the Ipoh to Padang Besar portion was proposed in 2002 as a continuation of the existing tracks.

In 2003, former Prime Minister Tun Abdullah Ahmad Badawi announced that the government had decided to postpone the project, which drew heavy criticism from his predecessor Tun Dr Mahathir Mohamad.

However, the project was revived when then Deputy Prime Minister Datuk Seri Najib Razak announced that the Cabinet Committee on Public Transport had decided to revive the shelved northern section double-tracking project in 2007.

The Rawang to Ipoh (southern) double-tracking and electrification project was completed in 2008 while the Ipoh to Padang Besar portion was proposed in 2002 as a continuation of the existing tracks.

The project was awarded to Gamuda Berhad and MMC Corporation Berhad. The major stakeholders of Gamuda and MMC are Raja Datuk Seri Eleena Sultan Azlan Shah and Tan Sri Syed Mokhtar Al-Bukhary respectively

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