This article first appeared in The Edge Malaysia Weekly on July 19, 2021 - July 25, 2021
THE Malaysian Anti-Corruption Commission (MACC) is understood to have visited airport operator Malaysia Airports Holdings Bhd (MAHB). While the details are not known, MAHB confirmed the agency’s visit in an emailed reply to questions from The Edge.
“MACC has visited our HQ recently. As usual, we have given our full cooperation in answering all their questions and furnishing any documentation required for their purpose. We are very confident that all due process was adhered to as per our corporate governance,” says MAHB.
While MAHB is understandably tight-lipped, sources familiar with the MACC raid say there are two contracts that have raised a few eyebrows lately.
The first is the aerotrain contract, dubbed Design, Supply, Installation, Testing and Commissioning for Automated People Mover (APM) and Associated Works at the Kuala Lumpur International Airport, for which Pestech International Bhd, in partnership with Canada-based Bombardier, is said to be the front runner. Certain quarters have gone so far as to say that a letter of intent (LOI) has been awarded to the Pestech-Bombardier joint venture.
MAHB, in response to whether an LOI has been awarded to the Pestech-Bombardier joint venture, says: “Our tender process for the APM replacement is still not concluded and as communicated before, the tender information is confidential business information. We will make an official announcement in due course once the tender process is concluded and there is a formal award.”
Speculation is rife that the Pestech-Bombardier bid, said to be above the RM750 million mark, is considerably higher than the lowest bid, at less than RM600 million.
Some of the other shortlisted bidders for the APM contract are MMC Corp Bhd, partnering Japan-based Mitsubishi Heavy Industries; Malaysian Resources Corp Bhd (MRCB), in a tie-up with Leitner-Poma of America Inc; privately held Hartasuma Sdn Bhd, in partnership with Austrian company Doppelmayr Seilbahnen GmbH; and local outfit SMH Rail Sdn Bhd.
Pestech-Bombardier, MMC-Mitsubishi and SMH Rail are understood to have sent in proposals for a self-propelled APM system, while Hartasuma-Doppelmayr and MRCB-Leitner are understood to have opted for a pulley system.
The existing aerotrain utilised by MAHB at KLIA is a self-propelled system. The cable or pulley system aerotrain does have its advantages as it is cheaper and has been successfully utilised at several large airports around the world.
There was also talk that MAHB had sidelined the consultants for the project, Jacobs, but this has been denied.
Another issue that cropped up was MAHB’s bidding process. The initial requirements in the tender documents did not specify the type of aerotrain preferred — either self-propelled or cable propelled. However, via a letter in March, after bidding was closed in November 2020, MAHB made amendments to the tender specifically asking for bids with cable-propelled systems as well.
Some of the bidders asked for a re-tender due to this discrepancy, but MAHB denied the need for a re-tender.
Late last month, MAHB awarded a multibillion-ringgit contract for Covid-19 screening and testing at KLIA’s main terminal and klia2 to BP Clinical Lab Sdn Bhd (BP Lab). According to sources, 31 companies had expressed interest in the tender and 17 submitted tender documents. In a nutshell, the contract involves five screening and testing centres at KLIA’s main terminal and three at klia2.
According to MAHB, 40,000 passengers a day are expected to use the new screening and testing facilities, with the cost per passenger ranging from RM60 to RM250 for Malaysians and RM90 to RM350 for foreigners. This means the testing could generate anything between RM2.4 million and RM14 million on a daily basis, or between RM876 million and RM5.11 billion in revenue a year.
It is worth noting that in 2019, there were 29.2 million passengers at KLIA and 33.1 million at klia2. In other words, passenger traffic was 80,000 a day at KLIA and close to 91,000 a day at klia2 in pre-Covid times, which makes the contract even more lucrative.
It is learnt that MAHB would receive 25% of the top line from whichever party is awarded the contract, which could make up for the losses it has suffered lately as a result of Covid-19 and the ensuing lockdowns. For the first three months of FY2021 ended March, MAHB suffered a net loss of RM221.3 million from RM336.91 million in revenue. This marked the fifth straight quarter of losses for the airport operator.
A check with the Companies Commission of Malaysia reveals that BP Lab is 61.04% controlled by Datuk Beh Chun Chuan while the other 38.96% is held by his wife Datin Poh Lay See. The company’s financials were not available.
It was known that BP Lab had partnered with MyEG Services Bhd for the bidding but for some reason, the award went to BP Lab alone.
Some of the companies that submitted tender documents include Bestinet Sdn Bhd, in a joint venture with Tass Tech Sdn Bhd; Maju Healthcare Sdn Bhd, which tied up with Gribbles Pathology (M) Sdn Bhd; and UEM Edgenta Bhd and MNC Global Sdn Bhd in standalone bids.
Many were surprised that UEM Edgenta, a 69.14%-owned unit of sovereign wealth fund Khazanah Nasional Bhd, did not win the contract as MAHB is a 33.21%-owned unit of Khazanah.
The question is, why wasn’t a potentially lucrative screening and testing contract not shared out between a few companies?
MAHB, in response to questions from The Edge, says: “The private Covid-19 testing for MAHB international airports was carried out on a competitive tender basis that was in accordance with our standard procurement process and governance. The evaluation had met the set criteria to fulfil the objectives as set out for the tender exercise. The award to BP Lab for KLIA and klia2 was based on the tender evaluation results for the best offer.”
While some of the other companies that submitted bids may not walk away empty-handed but could win screening and testing contracts at the airports in Subang, Kuching, Kota Kinabalu, Langkawi and Penang, BP Lab seems to have grabbed the largest slice of the pie, with KLIA and klia2 accounting for 62.3 million passengers, or 59.22% of MAHB’s total passenger count in 2019.
Some of the bidders, however, are understood to have complained that BP Lab’s testing would require three hours to process, meaning there could be several thousand people waiting for test results at any one time at KLIA and klia2.
Despite the challenging environment, MAHB’s share price has risen 16.4% over the past year to close at RM5.83 last Friday, translating into a market capitalisation of RM9.67 billion.
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