KUALA LUMPUR: Malaysia Airports Holdings Bhd has terminated the RM743 million contract to Pestech International Bhd to build a new aerotrain for Kuala Lumpur International Airport.
The termination was due to Pestech's non-performance on the automated people mover (APM) or aerotrain project in KLIA, MAHB said in a statement today.
The non-performance has compromised significant project milestones and risked delays to deliver the project within the deadline, it added.
This means the airport operator will look for another party or consortium to undertake the project soon, as the disruption of the aerotrain service has caused public outcry.
Pestech, through wholly-owned Pestech Technology Sdn Bhd, secured the job from MAHB's unit Malaysia Airports (Sepang) Sdn Bhd in December 2021.
MAHB said the termination notice was issued to Pestech Technology effective immediately.
The decision was taken by MAHB board of directors, in adherence to its principles of governance and based on rigorous monitoring of the progressive development of the APM project by the management and its independent consultants.
"(Pestech) has been found to be in material breach of its obligations under the contract and has failed to remedy the same within the specified time period."
MAHB managing director Datuk Seri Iskandar Mizal Mahmood said the project is of significant importance to ensure the comfort and convenience of its passengers travelling through KLIA.
"Our focus moving forward is on the timely delivery of the aerotrain while observing stringent quality control and safety standards of the project. There will be no compromise to our operations and governance processes," said Iskandar.
Following the notice of termination, which was preceded by a notice of default to Pestech, MAHB said it will be able to recommence and complete the works through the engagement of other parties, with a focus on ensuring the project is completed on schedule.
"Moving forward, MAHB remains committed to assign the necessary resources in order to minimise any potential delays to the APM project."
MAHB added that that it will expedite consultation and discussions with all existing stakeholders of the project for continuity and to mitigate any delays.
"These include working closely with all relevant parties involved in the replacement project of the train's tracks and system, as well as identifying an experienced and credible third-party contractor to ensure consistent progress of all project components," it added.