SHAH ALAM: The nationalisation of Boustead Naval Shipyard (BNS) – the builder of the LCS – has been delayed again, for the third time. The new deadline is now December 31, extended from the previous deadline of December 1.
I am pretty sure that the process will be delayed for the fourth time as December 31 comes at the end of 2023 and it is unlikely anyone will want to work – at least at full throttle – during the holiday period. I stand to be corrected, of course.
The full announcement by Boustead Heavy Industries Corporation Bhd.
PROPOSED DISPOSAL OF 27,000,001 ORDINARY SHARES IN BOUSTEAD NAVAL SHIPYARD SDN. BHD. (BNS) HELD BY PERSTIM INDUSTRIES SDN. BHD. (PISB OR VENDOR), AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BHIC, FOR A CASH CONSIDERATION OF RM1.00 (HEREINAFTER REFERRED TO AS THE PROPOSED DISPOSAL)
The terms used herein shall have the same meaning as those defined in the announcement dated 21 August 2023.We refer to the announcements dated 29 May 2023, 21 August 2023, 4 October 2023 and 1 November 2023 in relation to the Proposed Disposal.
Pursuant to the SSA and the subsequent agreements between the Parties, the Conditional Period for the fulfilment of the Conditions Precedent for the Proposed Disposal was extended up to 1 December 2023 (“Second Extended Conditional Period”). As the Parties require additional time for the fulfilment of the Conditions Precedent, the Company and the Purchaser have mutually agreed to extend the Second Extended Conditional Period of the SSA for a further period up to 31 December 2023 (“Third Extended Conditional Period”).
For avoidance of doubt, all other terms, and conditions of the SSA remain unchanged.
This announcement is dated 1 December 2023.
Although the cost of the take-over is RM1, the full cost of the nationalisation of BNS – which include liabilities and debt is RM1.86 billion. The LCS project is now to cost RM11.2 billion, an increase of RM2.098 billion from the original ceiling contract price of RM9.128 billion.
So, the whole cost of the project (minus the procurement cost of the SAM, torpedoes and other ammunition) is RM13.2 billion.
HT DM
— Malaysian Defence
View Comments (19)
Legal purgatory or just BHIC simply want to wrangle as much money back as possible? The longer for this issue to settle, the more delayed on restarting LCS build. Why cant those decisionmakers understand that its a matter of national security at stake and all parties must take a hit to let this project resume unhindered.
There is RM1.86 billion reason for this to be look at slowly. Especially most of it are debts incurred by BNS.
Its between Govt and GLC, left pocket and right pocket. Even if something isnt fully settled, no matter what its still the taxpayer will have to pay that RM 1.86Bil... just a matter of going into left pocket or right pocket.
31 Dec should be strictly final dateline set and if BHIC still cannot come to terms, the deal will be forced thru under Govt terms, whether they like it or not.
Its too easy say that but what if after rushing the deal, some of the debt that were paid were actually incurred for someone and an audit discovered it? Who will take the blame for it? And how to recover it then? If it left to BNS/BHIC to sort it out it will be much easier.
Do note that the sixth LCS supplementary contract was signed without full approval of the Attorney-General's Chamber. I am guessing this time around, the AGC is looking at the agreeement with a fine tooth comb and will not allow it to be completed without approving it.
Sigh... I understand your concerns, its just that over the years there has been nonstop obstacles & indecisions and when a decision was finally made, yet another obstacle is preventing from moving along again. And this still havent resolved the 6th boat which TLDM still needs. Until there is progressive steps to get the physical works going, its a never ending nightmare.
That is why we need to get it right from start which is clearly not the case with the LCS. Which incidentally started when they awarded the NGPV deal to PSC in 1999.
Just forget the whole deal as a nightmare. Bite the bullet. Take the loss n buy the LCS 1 direct fr9m overseas
Yep mistakes pile ontop to cover old mistakes, like building an unauthorised tower on quicksand.
@Lee Yoke Meng
"Take the loss n buy the LCS 1 direct fr9m overseas"
That wont happen........
@Lee Yoke Meng
LCS has became a 'too big to fail' project, and the cost implications is likely a lot more pricier if we restart from scratch now with all time high inflation, free falling RM, and any new shipbuilder would know we are going to be desperate so they hold the higher bargain power.
With >90% design works done and >80% been approved by NAVAL, its just a matter of financially paying to complete the balance design works by BNS and paying NAVAL to finalise the design approvals after BNS. This has been the biggest hurdle, once its cleared the rest of the works is just continue building those ships, and hopefully by 4th unit out the Govt would approve extra budget for the cancelled 6th boat.
So roughly about 2.64 billion pership (could be more).Got to be one of the most if not the most expensive 111m light frigate in the world.Im pretty sure RSN's Formidables with 32 SAM and Herakles radar and RTN's 3600 tonnes HTMS bhumibhol with AESA Radar,ESSM and Phalanx still cost less than our LCS..But yes lets just cooly awarded BNS with the contract to build ALL LCS in house..At the same time lets just bail out BNS as the govt 'terpaksa'or got no choice in this matter.
Here we go again… if i am the project manager i will consider Naval Group to dismantle the LCS & let them build LCS 1 from scratch. Pay whatever needed & be done with it. After LCS 1 completed, BNS can copy the completed unit with their sub-par construction techniques or whatever. And the best part is the detailed 3D blueprint still somewhere in Lala land
@Firdaus
Its likely the Formidables cost about the same even back then when you look at how much more advanced systems they carry and far more missiles & bigger guns. Plus the fact that majority of the fleet was locally built so TOT cost also applies as much. What makes the difference between ours is that SG realises how costly these ships will be and sufficiently budgeted their project, hence why it ran smoothly. We wanted a Camry at Vios prices (but still want all those Camry stuff) so the project budget was insufficient to actually complete it all. This was why we failed.
As for bailing out BNS, that is 'terpaksa' as we need to do it to save the LCS. Restarting from scratch would be even more expensive in my reply to Lee.
Frankly I for AND against defence buys as national service projects. Yes for large scale multi year production that could give jobs to dozens/hundreds of Msians (ships & armour), no if if only a small quantity & done by handful off workers (18 units LG1 light arty, building jet fighters).
Realistically we know national projects cannot be avoided so learning from these mistakes what can we do to stop/mitigate so that the same problems do not happen again;
1) be rationalised with the goal (TOT is pointless, the reason to build locally is to give jobs),
2) be transparent with the buy (use blind procurement system where only the specs must be fully met. Enduser cannot dictate the make or change the specs later. No direct nego or G2G w/o going thru open tender),
3) be realistic what we can do (let the OEM principal design the ship/armour. We just make them),
4) the same when we know a lot is out of our depth we must get OEM principal close participation, hire some their staffs for technical support if needed.
5) budget sufficiently inc missiles & munitions esp to cover all ancillaries (facility upgrades, localisation, integration, staycations a principal country, VIPs & their family visits, translator, etc),
6) If Govt can justify all these expenses & cost, the Opposition should shaddup and not starting to compare prices of other nations. Its always apples & oranges.
7) if done by private companies put in heavy penalty clauses to discourage those who tak mampu but try luck with super low bids,
8) if done by GLC put in project milestones and quarterly reporting to Parliament,
Will it stop future national projects from potential failure/ leakages/ cronyism? Nope as its built into the Msia system but what it can do is prevent as much possible from being FUBAR. Thats the goal.