PAC: Govt loses RM28.8m due to delayed replacement of concession vehicles

 

The Public Accounts Committee (PAC) revealed that the government incurred RM28.79 million in losses due to delays in replacing leased vehicles under a Finance Ministry concession agreement.

PAC chairperson Mas Ermieyati Samsudin said the delay forced Putrajaya to extend the lease of 5,323 vehicles beyond the original period of between 48 and 60 months, increasing rental and maintenance costs.

She explained that the situation had occurred because the concession company, Spanco Sdn Bhd (Spanco), failed to supply new vehicles according to schedule.

"The delay in replacing vehicles forced the government to spend more because it had to pay higher maintenance costs due to the use of concession vehicles whose lease periods had expired.

"The government had to pay the full monthly rental cost along with maintenance costs that were much more expensive compared to if the vehicles were replaced with new ones, which have much lower first-year maintenance costs," she told a press conference in Parliament this morning after tabling the report.

Additionally, Mas Ermieyati said PAC also found that the government failed to impose penalties for the delay in supplying the vehicles.

She added that there was a significant discrepancy between the original penalty estimate of RM54.51 million calculated by the audit and the revised amount determined with the ministries and user agencies, which stood at RM18.7 million for 27 ministries, excluding the Home Ministry.

"Part of the delay stemmed from factors on the government's own side, including changes in vehicle model variants, delays in administrative processes, special number plate registrations, installation of operational equipment, as well as unforeseen incidents like a fire on a vehicle carrier ship.

"Under the concession agreement clauses, Spanco is exempted from being penalised," she said.

The Masjid Tanah MP said the PAC held three proceedings between Nov 3 and Nov 18 last year by calling representatives from the Finance Ministry, Home Ministry, Health Ministry, Defence Ministry, and Spanco.

Weaknesses in contract management

The PAC also concluded that there were weaknesses in contract management by the Finance Ministry, particularly in the early implementation phase of the 15-year concession agreement, which is in effect from July 31, 2022, to July 30, 2037.

According to the PAC, these weaknesses included a communication gap between the Finance Ministry and user ministries as well as agencies, confusion over the start period for imposing penalties, and a failure to distribute contract documents to all relevant parties.

"This situation caused the government to be late in collecting late vehicle supply penalties from Spanco worth millions of ringgit," she said.

Besides that, the PAC found that the delay in supplying official vehicles did not critically affect public service delivery or national security.

However, Mas Ermieyati said the delay caused ministries and agencies to rent commercial vehicles using their respective operational allocations, thereby adding to the financial burden.

Following this finding, the PAC submitted five recommendations to the government to improve the systematic management of concession vehicles. - Mkini