SHAH ALAM: BHIC Submarine Engineering Services Sdn Bhd (BSES) has been awarded the LOA for an expansion of the Scope of Work and additional Contract Ceiling Price for the In-Service
Support Interim for the Royal Malaysian Navy Prime Minister Class Submarines.
The LOA is RM43.6 million, said BHIC in a press release today. The release:
BOUSTEAD HEAVY INDUSTRIES CORPORATION BERHAD (‘BHIC” OR “THE
COMPANY”) – RECEIPT OF A LETTER OF AWARD FOR THE IN-SERVICE SUPPORT
INTERIM FOR THE ROYAL MALAYSIAN NAVY PRIME MINISTER CLASS SUBMARINES
Further to the announcement dated 18 May 2023, the Company now wishes to announce that
on 30 April 2024, BHIC Submarine Engineering Services Sdn Bhd (“BSES”) (200301092901),
a wholly owned subsidiary of BHIC, has accepted the Letter of Award dated 17 April 2024 from
the Ministry of Defence Malaysia representing the Government of Malaysia, awarding BSES
an expansion of the Scope of Work and additional Contract Ceiling Price for the In-Service
Support Interim for the Royal Malaysian Navy Prime Minister Class Submarines (“Contract”)
at a contract value of Ringgit Malaysia Forty Three Million Six Hundred Thousand Only
(RM43,600,000.00). A formal contract between the Government of Malaysia and BSES will be
finalized and executed at a later date.
The Contract will contribute positively to the earnings of the BHIC Group for the financial year
ending 31 December 2024.
Save for Tan Sri Dato’ Wira Aziah Ali, (Dr.) Salihin Abang and Fahmy Ismail who are the
Directors of BHIC and BSES, none of the directors or substantial shareholders of the
Company, or persons connected with them, has any interest, direct or indirect, in the Contract.
This announcement is dated 2 May 2024
It must be noted that the contract is not for the refit work for the submarines announced by PMX when he unveiled the 2024 budget. The ISS and the refit work were previously done by Boustead DCNS Naval Corporation Sdn Bhd (BDNC). BDNC is a joint venture company between Boustead Heavy Industries Corporation Berhad (BHIC) and Naval Group of France. BSES was doing the maintenance work for the submarine facilities at the Kota Kinabalu naval base where the two submarines are based. BDNC CEO is now the CEO of BHIC.
Meanwhile, the Edge reported that BHIC continue to lose money in 2023.
Financially, BHIC’s net loss ballooned in the fourth quarter of 2023 from a year earlier mainly due to provisions for the long-delayed littoral combat ships (LCS) project. Net loss for the three months ended Dec 31, 2023 was RM256.72 million compared with RM26.48 million over the same period a year earlier.
The company booked an allowance for expected credit losses of RM261.4 million owed from Lumut Naval Shipyard Sdn Bhd, or Lunas.
Revenue for the quarter, however, rose 28.9% year-on-year to RM49.69 million from RM38.56 million.
For the full year of 2023, BHIC’s net loss widened to RM263.88 million from RM19.92 million a year ago, while its revenue declined 10% to RM127.36 million from RM141.76 million, due to variations in the milestones achieved for submarine contracts. The company did not declare any dividend during the year.
–Malaysian Defence
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IN-SERVICE SUPPORT INTERIM sound like additional jobs to be done that was not earlier specified in the current maint contract. But it also hides that additional payments are to be made. Whether its for the additional works needed or perhaps something else. Hmm…
ISS is for the maintenance of the boats on a regular basis, just like planes, ships and helicopters need to be operational. It is not like what you think it is. It is called in Interim as they had not decided to give the full contract for maintenance to the company.
“they had not decided to give the full contract for maintenance”
So its a billing for ad hoc services pending for the full contract for such service to be provided? But IIRC the regular ISS service is also on a yearly basis so what is the difference…
Then the pertinent question is why they havent given out yet, its not like we have another yard that could do sub servicing.
Its not done on a yearly basis, its done regularly as and when needed. I have no idea why they have not signed a permanent contract.
I remember the previous ISS contracts been signed is for 1 year period, so I was expecting this to be a yearly renewal or something. Unless we dont use it often enough to warrant for yearly maintenance.
How do they budget for something like that?
Agak2 ceiling and drawdown from that?
Via OPEX budget