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IJM’s RM1.12bil LRT3 contract terminated

IJM Corp’s RM1.12 billion contract for underground works on the light rail transit line 3 (LRT 3) project has been terminated.

Its wholly-owned subsidiary, IJM Construction Sdn Bhd (IJMC), received a notice of termination from MRCB George Kent Sdn Bhd (MRCB-GK) on July 8, the company said in a filing with the local bourse.

IJMC was awarded the contract on 13 March 2018. The project, involving the design and construction of an underground tunnel, stations, ancillary buildings and other associated works, was initially scheduled for completion in 31 months. Preliminary work had commenced before the project was suspended in June 2018.

In July 2018, the 37-kilometre LRT 3 project was back on track at a lower cost of RM16.63 billion, compared with its original price tag of RM31.65 billion, partly due to the cancellation of a 2-kilometre tunnel and an underground station. The project was also remodeled from a project delivery partnership model to a fixed price model to prevent cost overruns.

“The new contractual framework has resulted in MRCB-GK’s employment as the project delivery partner (PDP), under the PDP agreement with Prasarana Malaysia Bhd, being terminated,” IJM said in its filing. “Following the termination, and pursuant to the conditions of contract, MRCB-GK as the PDP has issued the notice to IJMC.

“IJMC is currently consulting its advisers and will seek appropriate legal redress under the contract,” the company added.

Apart from the potential earnings from the project, IJM said the termination of the project would not have any significant effect on the financial position of the group. — Construction+ Online

 

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