PAC finds conflict of interest in KLIA-klia2 rail link

The opening of the express rail link at the klia2 airport in this picture taken on April 29, 2014. – The Malaysian Insider file pic, June 16, 2015.

There was conflict of interest in the award of the Express Rail Link's (ERL) contracts to build a link between airports, the Public Accounts Committee (PAC) found, as the shareholders were from the same parties.

Its report on the 2.16km rail line to connect the Kuala Lumpur International Airport (KLIA) to low-cost airport klia2 stated that the contract was awarded by Express Rail Link Sdn Bhd (ERL) to contractors Syarikat Pembinaan YTL Sdn Bhd and Seri Yakin Sdn Bhd through direct negotiation.

ERL's majority shareholder is YTL Corporation Sdn Bhd which has 50% shares, while Lembaga Tabung Haji holds 40%. The balance is held by Trisilco Equity Sdn Bhd.

"There is a conflict of interest in the award of the tender which was done via direct negotiation with the contractor, since the shareholder of the main contractor and the main shareholder of ERL are from the same parties," PAC said in the report tabled in Parliament today.

As implementation agency, ERL was awarded the RM100 million contract by Putrajaya to design and build the rail link.

The project started in July 15, 2011, and was completed in October 1, 2013, after a year's delay and was operational in May 2 last year.

The PAC report also recommended that the RM2 passenger service charge (PSC) levied on commuters traveling between KLIA and klia2 or vice versa be abolished.

It said this was because the rail link was within the airport compound, which fell under airport operator Malaysia Airports Holdings Berhad's (MAHB) jurisdiction.

"The cost should be shouldered by MAHB and the RM2 charge should be abolished," the report further stated.

The report also said the justification of the RM2 charge for maintenance and operational purposes was "inaccurate", as klia2's opening had seen an increase in ERL ridership, with passenger numbers exceeding the original projection.

It was initially estimated that 1.07 million people, or 3,000 a day, will use the facility, which will give a projected revenue of RM2.14 million a year.

But since the opening of klia2, the number of commuters has increased by 28%.

Additionally, the PAC pointed out the RM100 million contract by Putrajaya to ERL is from government funds.

"The RM100 million financing grant for the construction of the ERL link should be studied in depth since the government allowed part of the PSC collection be channelled to ERL as revenue despite commuters not using the facility," said the report.

The report recommended that the National Audit Department conduct an audit on KLIA's development area to ensure concessions given to MAHB did not burden the government and people.

It also urged that any procurement by the private sector which used government grants adhered to existing rules and policies to ensure the government received value for money.

It added that Putrajaya needed to conduct detailed and in-depth studies so that any procurement management by the private sector did not result in any conflict of interest which would weaken the government.

- TMI