Boustead Subsidiary Hit With Claim

SHAH ALAM: The Defence Ministry is seeking liquidated damages totalling RM147.7 million from Boustead Heavy Industries Corp (BHIC) Bhd subsidiary, Boustead DCNS Naval Corp Sdn Bhd, for breaching its Scorpene submarines support contract.

In a filing to the Bursa Malaysia on July 11, BHIC says Boustead DCNS, received a letter of claim from the ministry on July 10 for compensation amounting to RM53.2mil and 19.3 million euros (RM94.5mil) for an undisclosed breach of contract for the in-service support (ISS) for KD Tunku Abdul Rahman and KD Tun Razak submarines.

The bridge of KD Tun Razak as the submarine conduct operations during Ramadan in june, 2016, TLDM picture

Boustead DCNS, which is 60% owned by BHIC and 40% by French naval systems builder DCNS SA, now known as Naval Group.

BHIC says Boustead DCNS was currently responding to the letter of claim stating that the company was confident that it will be able to defend against the claim.

KD Tun Abdul Razak at LIMA 17.

The ISS job was awarded to Boustead DCNS on Aug 12, 2010, for 193 million euros (RM946.34mil) and RM532mil.

The contract which was to expire in late 2015 – was renewed until May this year for 24.98 million euros (RM122.42mil) and RM161.22mil.

For the record, Tunku Abdul Rahman is currently undergoing its first major refit which is should be completed by now.

KD Tun Razak preparing to leave Kota Kinabalu base for her 2016 maiden voyage from 5th to 12th January. RMN

Boustead DCNS Naval Corp Sdn Bhd, received the RM1.232 billion contract to provide the the refit services to Tunku Abdul Rahman and Tun Razak, it was announced on Nov 16, 2015

It must be noted that the refit contract is separate from the ISS one. And it is likely, despite the compensation claim, Boustead DCNS will also be given a new contract for the ISS for the next five years.

CN Kamarulzaman (second right) walking inside the hangar where the refit is being conducted. Note the open front end of the submarine.

Why? Because, there is no other company in the country can do the job. Even if one were to set-up a new company, it will have to rehire the workers from Boustead DCNS to do the same job as they are the only ones who had the experience to do them.

— Malaysian Defence

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