Submarine Maintenance May Go to Another Company

12 Juni 2010

KD Tunku Abdul Rahman (photo : Xinhua)

PETALING JAYA: The long delay in signing the Integrated Support and Service (ISS) contract for the two Perdana Menteri-class submarines has fueled speculation that the government may award the deal to another local company.

The Malay Mail was informed by defence industry sources that at least one "well-connected" company was lobbying for the job. The company had secured other defence contracts in the past.

Last June, the government awarded a Letter of Intent to Boustead DCNS Naval Corp Sdn Bhd (BDNC), a joint venture between BHIC Defence Technologies Sdn Bhd and France-based DCNS S.A. BHIC is a subsidiary of public listed Boustead Heavy Industries Corp Bhd.

The sources said the other company, apart from lobbying the government, was also wooing DCNS which was reportedly "frustrated" with the delays in signing the ISS contract.

DCNS engineers and technicians are already working with local engineers and technicians employed by BDNC, at the Royal Malaysian Navy (RMN) base in Teluk Sepanggar, Sabah, to conduct maintenance and support for KD Tunku Abdul Rahman, one of RMN's two submarines, as part of a warranty programme included in the procurement contract.

On Tuesday, Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi told Parliament that the maintenance cost of the two submarines was yet to be finalised and the government was currently negotiating to secure the best deals.

The sources said although DCNS was unlikely to be excluded from the maintenance deal, there was a chance it may find itself "a new local partner".

The Paper That Cares had exclusively reported last month that negotiations for the ISS contract had reached an impasse due to a dispute over the cost of the contract. The impasse was reportedly due to the "astronomical figure" quoted by the proposed service provider.

The sum demanded was reportedly higher than the RM600 million originally agreed on.In a statement to Bursa Malaysia in June last year, Boustead Heavy Industries stated the government had expressed an intent to award a contract worth RM600 million to its joint-venture unit for in-service support for RMN's submarines.

BHIC told Bursa Malaysia the government, in its letter of intent, dated June 3, stated its intention to sign a contract with BDNC.

It was anticipated that negotiations would have culminated with a contract signing at the Lima 2009 show in Langkawi last December but instead DCNS was awarded a contract worth RM187.8 million for the procurement of operationallevel maintenance spare parts and support and test equipment for the submarines.

The RMN procured the two submarines, KD Tunku Abdul Rahman and KD Tun Abdul Razak, for RM3.4 billion in 2002 from French/Spanish shipbuilders, DCNS and Navantia.

KD Tun Abdul Razak is scheduled to arrive home late next month or in early August.

(Malay Mail)