SHAH ALAM: The nationalisation of Boustead Naval Shipyard (BNS) has been delayed yet again. Last month, Boustead Heavy Industries Bhd (BHIC) announced that the deal with the Ministry of Finance Inc. will be delayed.
BHIC on November 1 said that the parties “require additional time for the fulfilment of the conditions precedent” to finalise the conditional agreement. It said the deal will be delayed up to December 1. It was supposed to be completed today (November 3).
From the previous story:
BHIC had announced previously that the government was taking full control of the BNS and subsequently, the LCS project, for a token figure of RM1. The government however needs to pay BHIC some RM1.2 billion, most of which is liabilities incurred by BNS for the financial period of 2022 while the rest is the sum incurred by BNS to the company.
The exact amount of BNS liabilities is RM848.45 million and RM383.94 million is the sum owed by BNS to BHIC.
In its recent report, the Public Accounts Committee stated that BNS also had loans facility which amounted to some RM629 million. This mean that the full nationalisation of BNS will amount to some RM1.86 billion. According to my calculations, with the BNS outstanding loans, the cost of the LCS programme is actually RM13.2 billion. I did not take account the outstanding BNS loans in the figure, stated here which was RM12.44 billion.
The announcement by BHIC:
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, and 4 October 2023 in relation to the Proposed Disposal.
Pursuant to the SSA and the subsequent agreement between the Parties, the Conditional Period for the fulfilment of the Conditions Precedent for the Proposed Disposal was extended up to 1 November 2023
(“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 Extended Conditional
Period of the SSA for a further period up to 1 December 2023 (“Second Extended Conditional Period”).
For avoidance of doubt, all other terms and conditions of the SSA remain unchanged.
This announcement is dated 1 November 2023
— Malaysian Defence
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View Comments (16)
Due to redtape/paperwork/bureaucracy or haggling the actual sum the Govt need to pay BHIC?
I think its more the legal complications that need to be address
This company can't escape from the word delay.
Akmal - ''This company can’t escape from the word delay.''
As simplistic/clear cut as that? From what little I know it's a combination of various factors ...
As long as construction has restarted, it is ok since ultimately its the Federal Government of Malaysia. Any legal issues would be a matter of formality unless there is a dispute between parties. If the only progress is desktop design work, then its impossible for the ships to be handed over based on the schedule.
kel - ''it is ok since ultimately its the Federal Government of Malaysia.''
The ''Federal Government of Malaysia'' which can't for political and monetary
reasons scrap the programme and in one form or the other created the conditions which enabled a cock up of this magnitude to occur. Some enlightened souls however still belive it's all due to BNS.
kel - ''Any legal issues would be a matter of formality unless there is a dispute between parties''
A ''matter of formality''' or a host of bureaucratic processes which have to play out; due process?
kel - ''then its impossible for the ships to be handed over based on the schedule.''
An RMN friend I spoke has personal opinion that the lead ship might only be ready for commissioning in 2026/7. Let's see.
Ultimately the LCS saga is another ''venture'' which has led to huge wastage of public funds; has impacted the RMN's overall modernisation plans; play's a part in public perceptions towards defence and is a huge embarrassment; another reminder of our highly flawed self defeating way of doing things.
Perhaps people live in short memory era or keyword or headline memory era. LCS1 was never meant to be ready by 2024 or 2025. Downslip May 2024. Harbour Acceptance Test Nov 2024. Sea Acceptance Test Oct 2025. Physical handover August 2026. That is the official published schedulde. No one should be expecting a ship in 2024 or 2025. As long as the govt takeover is a done deal - govt will own the company eventually - it is just a formality, that is to say the government will do or pay what is required to get it done. Meaning physcial work restarts. If not, then the government isnt certain it will, can or want to take over BNS - no money.
https://www.malaysiandefence.com/first-lcs-to-be-ready-by-august-2024/
I cannot brain why is it so difficult to solve this problem. Bite the bullet now & BNS must take the fall. For the loss of jobs maybe the ministry of Human Resources can find a suitable way of to reimburse the workers. JUST HAND IT OVER TO NAVAL GROUP & let them do it. For godsake
Kel - “Perhaps people live in short memory era”
Unlike your good self I would assume.
Kel - “ If not, then the government isnt certain it will, can or want to take over BNS – no money”
Not to piss on your parade but the real question is whether the LCS will enter service with the desired capability and whether by the time it does; will actually be what’s needed?
Qamarul - “. JUST HAND IT OVER TO NAVAL GROUP & let them do i”
Must as as well wish for the tooth fairy because that option is as likely as Cuba becoming the world’s leading people lan oil producer or Swiss trains not running on schedule
The minister told Parliament on October 31, the previous government looked at replacing BNS, but found it too expensive. The current government concurred.
Too expensive of course because it is halfway down. Its better to work out with Naval Group for an alternate payment solutions like a concessions etc. It can be worked out. All these dilly dally in the end the cost will reach 15 or 16 billions ringgits with fewer ship. If them gov are not sure like this nore problem will resurface. I doubt the ships will be completed at all because surprise surprise the detailed 3d blueprints is bot even completed. Oh my country