MAHB imposes penalties on UEMC-BP

BT, June 20,2013

Malaysia Airports Holdings Bhd (MAHB) has imposed daily damages of about RM200,000 on the UEM Construction-

Bina Puri joint venture (UEMC-BP JV) for not completing its work on the Kuala Lumpur International Airport 2 (klia2) on time.

The airport operator told Bursa Malaysia yesterday that it had issued certificate of noncompletion (CNC) to UEMC-BP JV, thus invoking liquidated ascertained damages (LAD) of RM199,445.40 per day.

The LAD started on Sunday as the contractor was supposed to have completed the work on Saturday, it said.

“MAHB wishes to announce that in accordance with the terms of the contract, MAHB today (yesterday) issued the CNC to UEMC-BP
JV, the contractor of the main terminal building, for its inability to complete the work by the approved deadline of June 15 2013,” said the airport operator and klia2 project manager.

The move followed MAHB’s announcement on May 29 that it would impose LAD on klia2 contractors and take any other recourse available to the company under the contract.

Under the contract, a contractor is obliged to complete the work on time and is liable to pay damages for breach of contract if it fails to do so.

Early this month, MAHB had confirmed a delay in the opening of the new low-cost carrier terminal, which was scheduled for June 28, after taking into account several key quality and safety issues.

The UEMC-BP JV had asked for an extension until September or October to complete the additional work.

Based on the rate it is being penalised, total LAD would be about RM17.9 million if the work is completed by mid-September and RM23.9 million if by mid-October.

Last Friday, MAHB told Business Times that klia2’s new opening date will be decided by the terminal builder and it now awaits the new date.

The airport is said to be close to 90 per cent completed, with the main terminal building having the most work left to be finished.