KLIA Aerotrain back on track with 15 per cent cost increase and new IJM led consortium

KUCHING: The Kuala Lumpur International Airport (KLIA) Aerotrain replacement project which was previously put on hold is now back on track with a 15 per cent increase in cost and a new IJM Corporation Bhd (IJM)led consortium comprising of a 60:40 IJM-Pestech International Bhd (Pestech) joint venture (JV) and French train maker Alstom.

To recap, the KLIA Aerotrain replacement project was initially awarded to a Pestech and Alstom consortium back in Dec 2021 to a tune of RM743 million which comprised of RM396.5 million for the aerotrain system and engineering, procurement and construction (EPC) works, RM104.2 million in financing cost, and RM242.7 million for operation and maintenance concession.

The project was slated to be completed within three-years with a 10-year maintenance period thereafter but after Pestech began reporting quarterly losses in the fourth quarter of financial year 2022 (4QFY22), there were concerns that the Pestech consortium would not be able to complete the project within the agreed on timeframe.

Project owner Malaysia Airports Holdings Bhd (MAHB) terminated Pestech’s contract in Aug 2023 due to non-performance and invited previous tender participants to submit new proposals, this included the newly formed IJM-Pestech and Alstom consortium.

The new contract is worth RM456.1 million and is arrived by adding 15 per cent to the original aerotrain system and EPC contract value of RM396.5 million to reflect the cost increase while the original delivery timeline has been maintained at Mar 2025.

Alstom remains to be the original equipment manufacturer (OEM) for the KLIA Aerotrain project and according to Transport minister Anthony Loke, the first aerotrain commissioned to Alstom was nearly 90 per cent completed back in Oct 2023.

Industry analysts were largely unsurprised at the new contract award as IJM had previously taken up a 44.6 per cent stake in Pestech back in July 2023 along with a cash injection of RM124 million into the loss making company.

While 60 per cent of RM105.4 million of the new contract is a relatively small contract sum for IJM, analysts at Kenanga Investment bank Bhd (Kenanga research) said it is positive on this new contract win as it provides IJM with an immediate presence in the rail electrification space.