Thursday, January 05, 2012

KLIA 2: Did Malaysia Airports Mislead the Government?

The top management of Malaysia Airports Holdings Bhd (MAHB) must be held accountable for withholding crucial information on cost in the decision to shift site of the new low cost terminal, KLIA2 to the Government

On 14th December 2011, I had a press conference to explain the key reasons why the cost of the new “low cost terminal” KLIA2 had increased drastically from the originally estimated RM1.7 billion in 2007 to RM3.9 billion last year.

The underlying reason was the shift of the airport from the originally proposed northern site (KLIA North) to the current western site (KLIA West) which is under construction. The shift of the site has caused the cost of construction to bloat because KLIA West was already identified as unsuitable for the construction of an airport due to it being a peat swamp. This is increased the cost by at least RM1.2 billion.

In addition, the shift to KLIA West has resulted in the need for a 3rd runway costing RM270 million as well as a 2nd control tower costing an estimated RM300 million, which would not have been required had the new low-cost terminal be built in KLIA North.

MAHB made the briefest of response to my allegations on the same day, by claiming that I had referred to the old master plan which was no longer valid. MAHB said that the “National Airport Master Plan (NAMP) 2008 has super-ceded by the KLIA Master Plan (1992).”

The answer begs the question because my allegation is exactly that the NAMP’s decision to shift KLIA2 to the new site from the original site, KLIA North recommended in the 1992 KL International Airport Master Plan had caused the drastic increase in the cost.

In fact based on MAHB’s own presentation to the Finance Ministry as late as 6th July 2007, MAHB had reconfirmed that the KLIA North was the best option available to build the new KLIA2. MAHB had argued that the advantages of KLIA North include:

  • Efficient operations since the aprons are well connected to either Runway 1 or 2.
  • Ample land available for future expansion
  • Good access to the area via the perimeter highway
  • Proposed site complement KLIA as an Integrated Hub for low cost carriers and legacy airlines
  • And it complies to KLIA Master Plan 
MAHB also presented a 3-phase expansion programme where the new low cost terminal at KLIA North will be able to meet the increase in passenger traffic from 15 million to 25 million to 45 million per annum.

However, in a separate presentation to Finance, Home and Transport Ministry officials on 15 April 2008 on the NAMP, the MAHB made a 360-degree turn by recommending KLIA West as the new site for the new low-cost terminal. Based on the presentation documents and the minutes of the meeting, MAHB has failed to highlight the fact that the new KLIA2 will cost substantially more due to reasons already identified in the 1992 KLIA Master Plan.

The 1992 Master Plan had clearly stated that “the western part of the site mainly comprises saturated marine clays with an overlay of peat material… The combination of the drainage problems and the type of material means that the western part of the site has poor bearing qualities and is not suitable for airport construction without undertaking significant engineering measures to improve load bearing capacity… Even after these measures have been undertaken there is likely to be some settlement of the ground and the area should be allowed to consolidate for a period prior to being used for airport construction.”

Hence despite knowing full well that the KLIA West is unsuitable for airport construction and will incur substantially higher cost, MAHB has intentionally chosen not to disclose this crucial information to the relevant Ministry officials. This has resulted in the lack of objections to the shift of the new low-cost terminal to KLIA West. As a result, MAHB which is a 54% subsidiary of Khazanah Bhd, has caused the cost of KLIA2 to bloat by more than RM2 billion at the expense of the taxpayers.

The MAHB top management must be held fully accountable for the unacceptable increase in cost especially in the light of their being economical with the truth on the cost of construction with the Government. They must explain why is it that within a few months from July 2007 to March 2008, the “best” site for the new KLIA2 can be suddenly shifted from KLIA North to KLIA West.

Dato’ Seri Kong Cho Ha, as the responsible Minister in-charge must ensure that heads must roll for the RM3.9 billion KLIA2 fiasco. The Minister to date has failed to make even a single comment on the issue, which clearly demonstrates that he is shirking his responsibility to look after the public interest.
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