MAHB: Final decision on klia2 LAD issue by June

SEPANG: Malaysia Airports Holdings Bhd (MAHB) will announce the final decision on the liquidated and ascertained damages (LAD) imposed on UEM Construction Sdn Bhd and Bina Puri Sdn Bhd latest by June.

“We went through mediation and we are finalising a few details which would definitely be concluded by the second quarter of this year, at the latest,” MAHB managing director Datuk Badlisham Ghazali told reporters after the airport operator’s AGM yesterday.

LAD was imposed on UEM Construction and Bina Puri due to the delay in works on klia2. However, the contractors disputed the fine, saying that the delay was caused by changes made to the original plan.

According to Badlisham, the total amount of the LAD is RM15 million. However, based on an estimated RM5 million charge per month according to published LAD considerations, it should have exceeded RM95 million as the delay ran for more than 19 months.

Calculated from June 16, 2013, the LAD runs at RM199,445.40 a day. MAHB had said that the LAD is calculated until the issuance of the Certificate of Practical Completion (CPC).

The effective date of the CPC is Jan 26, 2015 while the defects liability period runs from Jan 27, 2015 until Jan 26, 2017.

Meanwhile, MAHB hopes to complete the arbitration process between its unit Malaysia Airports (Properties) Sdn Bhd and Petronas Dagangan Bhd’s subsidiary Kuala Lumpur Aviation Fuelling System Sdn Bhd (KAFS) by yearend.

“This is in the hands of the federal government. Because of this claim (RM456 million claim by KAFS), the federal government has accelerated the discussion at both the Transport Ministry and the Finance Ministry,” said Badlisham.

To recap, Malaysia Airports (Properties) signed a 50-year concession with KAFS for the operation of the aviation fuelling system at Kuala Lumpur International Airport (KLIA) in 2007. However, the concession was reduced to 25 years when the government restructured and shortened the operating agreement (OA) with MAHB. The OA expires in 2034.

“The attitude is to get a resolution on the time period rather than looking at the amount (claims). The resolution is to continue with that 50-year period,” said Badlisham.

CFO Raja Azmi Raja Nazuddin said the RM456 million claim by KAFS is for loss of income with a future profit element, which would involve quite a high burden of proof and MAHB does not foresee any material impact on its financials.