THE Defence Ministry (Mindef) is considering two options to salvage the delayed RM9 billion littoral combat ships (LCS) project by Boustead Heavy Industries Corp Bhd (BHIC), said Defence Minister Datuk Seri Ismail Sabri Yaakob.
He told the Dewan Rakyat yesterday the government is mulling either to let BHIC complete the project with the remaining amount of the contract or terminate the project and appoint a “saviour” company.
Ismail Sabri added that another option was also on the table, which was to appoint Naval Group France (NGF) as a rescue contractor to complete at least two out of the LCS units, but the proposal was rejected by the Cabinet.
“We had brought three options to the Cabinet for a long-term plan to save the project, of which the contract will end in 2023. It is still within its contract timeline.
“Among them are to appoint NGF to complete the ships, to let BHIC complete the projects and terminate the contract.
“The Cabinet has decided that we will not go for the first option (of appointing NGF) and we also have to know BHIC’s plans if we ask them to continue,” he said in his winding-up speech yesterday.
He added that should BHIC be asked to continue with the project, the government would have to release the remaining RM3 billion of the contract.
The LCS project was awarded to BHIC’s shipbuilding arm, Boustead Naval Shipyard Sdn Bhd (BNS), by the ministry in 2011 involving six vessels constructed for the Royal Malaysian Navy.
Ismail Sabri said, in the meantime, BHIC has conducted due diligence including lodging a report with the Malaysian Anti-Corruption Commission (MACC) on possible irregularities in executing the projects.
Previously, BHIC said findings of the forensic audit commissioned last February had been handed over to the MACC in September.
According to news reports, the first ship of the project was supposed to be delivered in April 2019, a two-year delay from the initial maiden delivery date in 2017.
Yesterday, lawmakers passed Mindef’s RM15.86 billion expenditure for next year, the fifth-largest allocation under the Supply Bill (Budget) 2021. Out of the total expenses, the ministry will spend RM11.36 billion for its operation and RM4.5 billion for development.
The Dewan Rakyat also approved ministerial expenses for the Federal Territories Ministry at RM956.78 million and the Home Ministry at RM16.85 billion.
The lower house will convene today to debate and vote for the final two ministry’s expenses, Higher Education Ministry and Education Ministry, which constitutes the largest portion of the supply bill.