Wednesday, November 23, 2011

Did the Cost of KLIA2 Double?

It was reported on the front page of The Edge Financial Daily yesterday that the cost of KLIA2, or the new low-cost terminal has ballooned to more than RM4 billion or more than double its original budget.

The severe cost overrun is shocking and shows that the Minister of Transport, Datuk Seri Kong Cho Ha has failed in his responsibilities to keep the cost of its projects. MCA Ministers of Transport has a history of failing miserably in managing project costs which has resulted in the rakyat having to bear the burden of billions of ringgit in cost overruns such as the RM12.5 billion Port Klang Free Zone, the RM5.8 billion Ipoh-Rawang double-tracking railway and the purchase of substandard train systems for KTM Bhd at inflated prices.

Now it appears that the KLIA2 project will be added to the list of MCA Transport Minister’s incompetence. The consequences of such extravagance will be enormous as the higher cost will either be translated into higher airport taxes and charges – hurting both domestic consumers and international passengers, and ultimately our tourism industry. Or if the charges are kept at currently levels, then the cost burden will be shifted to the Government which has to unnecessarily subsidise the airport via soft loans, grants or drastically reduced financial returns from the project owner, Malaysia Airports Bhd (MAB).

It is worthwhile to note that in early 2009, Sime Darby, in partnership with AirAsia had proposed to build a new KLIA low-cost airport in Labu at the cost of only RM1.6 billion without costing the Government a single sen. However, the plan was scrapped by the Government, partly because MAB had promised to build a new terminal at KLIA at the cost of less than RM2 billion by June 2011.

Therefore the Minister of Transport must provide full clarification and justification as to why he has failed to manage and control the cost of the new airport. He must also explain why the project has been delayed to April 2012 as announced by the MAB Managing Director, Tan Sri Bashir Ahmad in August this year, and whether there will be any further costly delays to the project.

If Datuk Seri Kong Cho Ha does not respond to parliament in a transparent and accountable manner, I will be formally requesting the Public Accounts Committee and the Auditor-General’s office to investigate the project to find out the real reasons for the massive RM4 billion KLIA2 scandal.
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