Malaysia Airports seeks RM298mil compensation from KLIA2 consultants

KLIA2 opening its door for public at open day.

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) has filed for arbitration against three consulting firms that were involved in the KLIA2 development project, seeking claims totalling as much as RM298mil plus interest.

In three separate statements to Bursa Malaysia, MAHB said it had issued notices of arbitration to KLIA Consultancy Services Sdn Bhd (KLIACS), Straits Consulting Engineers Sdn Bhd (SCE) and HSS Engineers Bhd's associate HSS Integrated Sdn Bhd (HSSI) regarding their alleged “breaches of obligations”.

For KLIACS, the obligations were covered under a project management consultancy agreement signed in December 2010 while the obligations for the other two were spelled out in memoranda of agreement inked in April 2010.

According to MAHB, it had appointed KLIACS to provide consultancy services for the proposed development of the new Low Cost Carrier Terminal (LCCT) -- this was later renamed KLIA2 -- and the third runway. The other two consultants, meanwhile, were hired to provide civil and structural consultancy services for the proposed development of the LCCT and associated services at the KL International Airport.

The airport operator did not give details on the “losses and damages” it suffered that led to it pursuing arbitration.

On the sums sought, MAHB said it was claiming against KLIACS to be wholly or partly liable for its losses and damages, estimated to be RM148.9mil as at October 2016.

It is seeking an estimated RM84.3mil from SCE as at October 2016 and an estimated RM64.6mil from HSSI as at May 2016.

For each of the three, MAHB is also seeking interests, costs, and any other relief that the arbitrator may deem fit and just.

The announcement to Bursa Malaysia did not give details of the disputes, but MAHB had come under fire due to the long delay in the opening of the RM4bil KLIA2.

In May 2013, MAHB said it would seek liquidated and ascertained damages (LAD) from contractors over the delay in constructing KLIA2, which was slated to open on June 28, 2013.

KLIA2 was initially planned for completion in 2011 but the deadlines were extended several times. Operations eventually began in May 2014.

Subsequently. the Public Accounts Committee urged the Auditor-General to conduct a full audit on KLIA2 to investigate its completion delays and over-budgeting.

In a filing with Bursa Malaysia, HSS Engineers said its associate HSSI had taken steps to seek the basis for the alleged claim and supporting documents from MAHB.

"Until the date of this announcement (Thursday), MAHB has failed to provide the supporting documents sought by HSSI. In the circumstances, HSSI is of the view that the alleged claim is unsubstantiated and without merit and have denied and refuted the same," the company said.

"Further, the company and HSSI are of the view that the notice of arbitration is premature given MAHB and HSSI are in an ongoing mediation as required pursuant to the MOA. HSSI shall take all necessary steps to defend and safeguard HSSI’s interests in the arbitration proceedings, including but not limited to seeking legal advice on the merits of the claims and whether the commencement of arbitration by MAHB is premature or wrongful given the ongoing mediation proceedings."

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