This article first appeared in The Edge Malaysia Weekly on October 24, 2022 - October 30, 2022

THE federal government is unlikely to intervene in the ongoing dispute between Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) and four subcontractors known as the Melima Consortium that constructed a portion of the RM4.2 billion Damansara-Shah Alam Elevated Expressway (DASH).

In a text message to The Edge, caretaker Works Minister Datuk Seri Fadillah Yusof says of the dispute, “[It involves] contractual issues. A contractor [was] terminated due to underperformance. It’s [a] legal issue that we (the government) can’t intervene [in].”

He stresses that the government cannot step in as DASH is a private project, “not funded by the government”.

When asked about the subcontractors that have not been paid, Fadillah says, “That (the dispute) will be between the main contractor and the subcon (subcontractors).” He adds, “[I] was told the main con duly paid for all work done.”

Projek Lintasan Damansara-Shah Alam Sdn Bhd (PLDASH), a wholly-owned unit of Prolintas, is the concession holder of the 20.1km DASH, which connects Puncak Perdana in Shah Alam and Penchala in Damansara. Meanwhile, Turnpike Synergy Sdn Bhd, another wholly-owned unit of Prolintas, is the main contractor for the construction of the highway.

News reports have it that PLDASH’s 25-year concession commenced in late December 2014, while construction started in August 2016.

The government has been dragged into the dispute as Prolintas is wholly-owned by state-controlled unit trust outfit, Permodalan Nasional Bhd.

According to the subcontractors referred to as the “rescue subcontractors” that undertook the construction of Package CA4 — one of eight work packages under DASH — they are owed RM80 million by Turnpike Synergy.

The subcontractors have been waiting since March last year to be reimbursed for their work. News reports in July 2021 stated that they were owed RM100 million, which could indicate that they have received some compensation from Turnpike Synergy.

While Fadillah says the government will not intervene, it is understood that other measures are being taken to solve the dispute.

Melima Consortium, comprising Pembinaan Melima (M) Sdn Bhd, Tropical Profile (M) Sdn Bhd, Pembinaan Thin Chai Sdn Bhd and Prosper Apex Sdn Bhd, had written to the Malaysian Highway Authority (MHA) or Lembaga Lebuhraya Malaysia on Oct 20, seeking a meeting this Thursday (Oct 27) to explain their situation. The consortium is also keen to have the MHA act as a mediator between itself, concession holder PLDASH and main contractor Turnpike Synergy.

In an Oct 18 statement, the Works Ministry said, “To avoid confusion, the concessionaire is the party responsible for all payments to contractors rather than the government.

“Under the concession agreement entered into, the (MHA) has regulatory authority to audit the budget for the highways and conduct interventions.

“The Works Ministry has instructed MHA to immediately hold meetings with concessionaires and key contractors with the presence of subcontractors affected by the outstanding payments to them, to ensure that all outstanding payments are resolved as soon as possible as directed by the prime minister,” it added.

The MHA is a statutory body under the Works Ministry.

The complaints by the Melima Consortium members have escalated, and last week, caretaker prime minister Datuk Seri Ismail Sabri Yaakob, while officiating at the Malaysian Malay Contractors Association’s convention and annual general meeting, said he would ask the Works Ministry to explain the unpaid debt of RM80 million.

“There must be reasons why the payments were not made. Although the project is completed, we must also see if the (Works) Ministry is satisfied,” Ismail Sabri is reported to have said. In a nutshell, he stressed that the debt to the parties involved should be settled.

The Melima Consortium entered the picture in 2019 after Turnpike Synergy had issues with the work package contractor, Panzana Enterprise Sdn Bhd. Panzana was terminated in March last year for various reasons. Problems emerged as Panzana had subcontracted some portions of its contract to the Melima Consortium.

The consortium members, meanwhile, were left without an existing agreement with Turnpike Synergy, and only had a valid enforceable contract with Panzana.

Panzana, which was registered in 1982, is wholly-owned by Datuk Ahmad Sufian Abdul Majid. The company has a paid-up capital of RM5 million. Efforts to contact Panzana via email and telephone were unsuccessful. Calls to Ahmad Sufian did not go through, and short messages sent to him were unanswered.

Panzana’s financials are not available as it is an exempt company.

It is unclear what problems Panzana had with the construction of the highway. The company is understood to have sought judicial management as it is financially distressed. Nevertheless, the Melima Consortium had completed 85% of the job before Panzana was terminated. Turnpike Synergy is understood to have appointed another contractor to complete the job scope.

To recap, the construction of DASH was divided among eight work package contractors via an open tender process. Payment for the work was undertaken by Turnpike Synergy.

Prolintas says in a statement that Turnpike Synergy has undertaken its role as the main contractor in a responsible manner and that “all claims will be analysed, checked and certified via a transparent process in line with the percentage of work done, and according to contractual terms and conditions”.

The highway owner and operator says that since DASH was only recently completed on Sept 30, and commenced operations in mid-October, its construction is within the defect liability period, and as soon as all final claims of the work package contractors have been analysed and certified, a final account will be issued.

Prolintas is the largest highway operator in the Klang Valley. Other than DASH, it has under its belt the Ampang-Kuala Lumpur Elevated Highway, the Guthrie Corridor Expressway, Lebuhraya Kemuning Shah Alam, the Kajang SILK Highway and the Sungai Besi-Ulu Kelang Elevated Expressway.

As at end-December 2021, Prolintas had total assets of RM15.29 billion, while its total liabilities were pegged at RM12.51 billion. For the financial year ended December 2021, the company chalked up after-tax profits of RM142.61 million from RM343.67 million in revenue.

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