LRT3 contractors under financial stress as Prasarana has not paid for work done since July
KUALA LUMPUR (Dec 31): Prasarana Malaysia Bhd is believed to have withheld payment of more than RM700 million that is owed to 17 contractors and consulting firms for the Light Rail Transit 3 (LRT3) project.
According to jointly signed letters to Prime Minister Tan Sri Muhyiddin Yassin, Ministry of Finance (MoF) and Ministry of Transport (MoT) dated Dec 20, the 17 firms said Prasarana had not paid them since July.
As of October, the contractors were owed RM700 million, and after taking into account work done in December, this amount would exceed RM1 billion
The reason Prasarana delayed the payment to contractors is not known. However, the delay in payment has pulled many contracts and their subcontractors deeper into financial problems as a result of tight cash flow.
Given the financial stress, these 17 contractors have together appealed to and sought help from the government.
“Tan Sri, in order to meet the project deadlines set by Prasarana, we have tried our best to fund the works with our own internal funds. However, we cannot continue to do so as the outstanding sum is quite large.
“The current conditions have placed pressure on our finances and have impacted the progress of this project,” read the letter.
The letter stated that the 17 contractors are currently under pressure from subcontractors, suppliers and other relevant stakeholders to make the relevant payments in the respective stipulated time frames.
The LRT3 project measures 37 km in length and spans 20 stations between Johan Setia, Klang and Bandar Utama.
Among the signees of the letter are MRCB George Kent Sdn Bhd (a joint venture between Malaysian Resources Corp Bhd and George Kent (M) Bhd), WCT Bhd, Sunway Construction Bhd unit Sunway Construction Sdn Bhd, Mudajaya Corp Bhd and Emrail Sdn Bhd.
The Edge is in the midst of contacting MoT and MoF to confirm the receipt of the letter addressed to the respective ministries.Kathy Fong
LRT3 firms want govt’s help as Tajuddin-led Prasarana withholds RM700m payments
Published 3:15 pmModified 4:44 pm
The top executives of 17 contractors and consulting firms involved in the LRT3 project have turned to the government for help as they are owed more than RM700 million for work done since July and this amount is expected to break RM1 billion this month.
According to a joint-letter which the companies sent to Finance Minister Tengku Zafrul Abdul Aziz and Transport Minister Wee Ka Siong today, they said Prasarana has not paid them for the work done on the LRT3 project from July to December and that they are now facing difficulty to continue with the rail construction.
“Dato’ Seri, in order to ensure the project meets the deadline of development progress as set by Prasarana, we have tried our best to fund the works through our own internal funds.
“However, we can no longer do so as the outstanding sum owed is quite huge. This is putting major pressure on our finances and has impacted the development progress of this project,” according to the letter sighted by Malaysiakini.
It is understood that the same letter will also be sent to Prime Minister Muhyiddin Yassin on Monday.
Sources familiar with the matter said Prasarana chairperson Tajuddin Abdul Rahman has been turning the screws as he wants a say on the appointment of subcontractors for the LRT3 project.
The Umno leader was appointed as the Prasarana chairperson in May.
At the time of writing, Tajuddin has yet to respond to Malaysiakini‘s requests for comment.
“We have no comments on this subject for now,” said a Prasarana official in a text message.
One of the sources told Malaysiakini that the delays were despite Prasarana having the funds to make the payments owed to MRCB-George Kent as the project’s main contractor.
“The project progress by the 17 companies has reached 43.4 percent as of the end of November.
“What is the rationale of withholding the payment to MRCB-George Kent when the companies have worked hard to achieve the progress and exceeded the target?” asked the source.
Prasarana, a wholly-owned unit of the Finance Ministry, is the owner of the LRT3 project.
Meanwhile, MRCB-George Kent, a 50-50 joint venture of Malaysian Resources Corp Bhd and George Kent (M) Bhd, is the turnkey contractor.
A total of 17 companies, including MRCB-George Kent, are involved in the construction of the LRT3 line.
According to the letter, the withheld payments have led to a chain of delayed payments not only to suppliers and other stakeholders, but also commitments with financial institutions.
The situation is also made worse by the impact of the Covid-19 pandemic to local businesses and their overall operations involving more than 10,000 workers, they said.
Prasarana had previously declined to comment on a report by The Edge, which questioned the leadership and direction of the company since Tajuddin’s appointment as chairperson.
Earlier this month, The Malaysian Reserve reported that Prasarana had demanded more say in the appointment of subcontractors, but the request was rejected by MRCB-George Kent, resulting in the withheld payments.
The financial daily also quoted a source who alleged that a high-ranking individual in Prasarana had asked MRCB-George Kent to award a work package worth some RM300 million to a particular firm linked to the individual.