Industry: George Kent likely to subcontract 80pc of Ampang LRT work

KUALA LUMPUR, Aug 5 — The George Kent-Lion Pacific joint venture, which has fallen under scrutiny for winning the RM1 billion Ampang LRT tender despite allegedly lacking rail expertise, may have to subcontract nearly 80 per cent of works for the project, The Edge Weekly has reported, citing industry executives.

This is because George Kent, more known as a manufacturer of water meters, pipes, valves boilers and fibre glass reinforced polyester water tanks, is not the original manufacturer of any of the components needed for the Ampang LRT line extension, one executive was quoted as telling the business newspaper.

“It is not uncommon for large portions of contracts to be given to subcontractors by the main contractor when it involves general work packages, for example, construction,” a rail sector project consultant was quoted as saying.

But the consultant added that subcontracting more than 30 per cent of the specialised work package was questionable, as George Kent should have been originally selected for specific technical capabilities.

The award of the lucrative Ampang LRT extension project to the George Kent consortium on Tuesday has come under heavy fire following claims of political interference in the tender process, as alleged by PKR strategy director Rafizi Ramli.

Rafizi had also claimed George Kent had scored the lowest points in the technical and commercial evaluation process for the project and that it was initially the UK-based Balfour-Beatty consortium that was selected for the award by the Finance Ministry Acquisition Committee.

The PKR leader had also accused Datuk Seri Najib Razak of reversing the decision and granting the tender to George Kent instead, which he claimed was controlled by a “close associate” of the prime minister.

According to The Edge, George Kent even approached Balfour-Beatty to become one of the subcontractors but industry executives claimed the UK-based consortium had spurned the offer.

But the firm reportedly told the paper that it was still interested in participating in Malaysia’s rail sector projects, despite refusing to comment on any possible tie-up with George Kent.

Quoting a top executive at Siemens, The Edge reported that the German-based engineering group would likely participate in the Ampang LRT project as a subcontractor.

Siemens, the executive told the paper, was capable of undertaking most of the project’s major subsystems.

The long delayed systems work tender is said to be the most technical package in the Ampang line extension project, which industry executives have agreed would be the most complex.

It comprises seven major sub-systems: signalling, track works and a third rail, communications, supervisory control and data acquisition, power supply and project management as well as systems integration.

“Even with experienced contractors, the job represents a huge challenge for seasoned railway players,” they were quoted as saying.

On Thursday, George Kent came out for the first time to deny allegations that it had won its tender bid for the Ampang LRT project despite being not as qualified.

In the company’s first statement to the media since winning the Ampang LRP project on Tuesday, Cheong Thiam Fook, executive director of George Kent and also project director of the George Kent-Lion Pacific joint venture (GKLP-JV), said that the partnership was well positioned to deliver the project.

“We strongly refute the baseless allegations that GKLP-JV failed the full technical and commercial evaluations,” said Cheong, who is also a qualified engineer and was involved in the construction of the Ampang LRT line Phase 1 and 2 from 1994 to 1998.

He added that there was “also absolutely no question that George Kent has a healthy balance sheet and is in a strong cash position”.

As of January this year, George Kent had cash and cash equivalents of RM54.9 million while its debts amounted to RM34.46 million.

For the 2012 financial year ended January 31, the group reported a profit of RM19.3 million on the back of RM152.2 million in revenue.

Cheong said that George Kent has managed to diversify into managing construction projects involving complex mechanical and engineering requirements in Malaysia and overseas, and has successfully delivered large projects on time and on budget, including the construction and design of the new Kuala Lipis Hospital valued at RM100 million, which was recently completed with zero variation orders.