Navy the malaysian defence minister: Mindef mulls delayed littoral combat ships project

[ANGMAR]

KUALA LUMPUR, Aug 3 — The Ministry of Defence (Mindef) is considering three options in relation to the direction of the littoral combat ship (LCS) project, which has been delayed, said its Minister Datuk Seri Ismail Sabri Yaacob.

He said that, as at July 31, none of the six LCS ships had been successfully completed by Boustead Naval Shipyard Sdn Bhd (BNSSB).

The overall work progress status of the project was 56.67 per cent compared to the original plan of 85.73 per cent, a delay of 31.1 months (29.06 per cent), he said.

Following that, a memorandum would be presented to the Cabinet after the ministry’s top management made a final review of the documents in the near future, he added.


“The first option is for the project to be continued by appointing Naval Group France as a rescue contractor through a Deed of Assignment with BNSSB using the remaining contract ceiling to complete at least two LCS units.



“As for the second option, the project is continued by BNSSB with the remaining contract ceiling to complete at least two LCS units,” he said while winding up the debate on the motion of thanks for the Yang di-Pertuan Agong’s royal address for his ministry in the Dewan Rakyat, today.

Ismail Sabri said that the third option is the termination of the contract with BNSSB and the ministry starting efforts to save the project.

He said the ministry did not intend to inject additional funds to complete the LCS, instead BNSSB was asked to use the remaining allocation to continue the project.

“The government will not pay the debts acquired by BNSSB as requested by the company, however, the government will implement the payment to obtain the rights and complete the Detailed Design.

“Besides that, the government (will) make a claim for all the blocks and hulls of ships and LCS equipment purchased by BNSSB as the government has paid almost RM3 billion for this purpose,” he said.

He added that the current progress status for LCS 1 is at 59.79 per cent; LCS 2 (48.09 per cent); LCS 3 (43.75 per cent); LCS 4 (36.49 per cent) and LCS 5 (20 per cent) while LCS 6 has yet to start construction.

Touching on the issue of the acquisition of McDonnell Douglas MD530G helicopters, Ismail Sabri explained that the Cabinet’s decision on Dec 18 last year was to continue the contract, after taking into account the financial implications.

He said that currently all six units of helicopters have yet to be delivered to Malaysia because three of them are still not ready.

“While the other three which have been completed need to go through the certification process (Type Certificate and Certificate of Airworthiness) and Pre Delivery Inspections (PDI) at the original equipment manufacturer (OEM) premises, MD Helicopter Inc (MDHI) USA, before being sent to Malaysia.

“These helicopters are expected to be handed over to the government before November 2021 after the company involved fulfils all contract obligations that are still pending, namely helicopter certification; exercise; Pre Delivery Inspections (PDI); and Final Acceptance Test (FAT),” he said.

He said that the procurement of the aircraft was for the use of the army which was in dire need of ‘air mobility’ assets, especially in the military operations area of the Eastern Sabah Security Command (ESSCom). — Bernama



https://www.malaymail.com/news/mala...delayed-littoral-combat-ships-project/1890638

 

[Anmdt]

The shipyard is owned by Army (through pension management funds) and the state (in total of 60%), that makes me wonder if the issue is entirely political. Currently seems to be at a dead-end which payment is not made because of the delays, company can not proceed because the payment is not made, thus not able to pay the credits.

 

[ANGMAR]

The shipyard is owned by Army (through pension management funds) and the state (in total of 60%), that makes me wonder if the issue is entirely political. Currently seems to be at a dead-end which payment is not made because of the delays, company can not proceed because the payment is not made, thus not able to pay the credits.

the current progress status for LCS 1 is at 59.79 per cent; LCS 2 (48.09 per cent); LCS 3 (43.75 per cent); LCS 4 (36.49 per cent) and LCS 5 (20 per cent) while LCS 6 has yet to start construction.

and what will they do with the partially completed ships ?

 

[Anmdt]

and what will they do with the partially completed ships ?

Depends on how much invested in those parts,but possibly:
-Let shipyard go bankrupt (which can be forced to, by contract penalties), acquired by somebody else (or state, or a private foreign shipyard) continue the construction with a negotiation with the new owner. It can be absorbed by some other state company before bankruptcy , by a JV etc as well.

But deal was covering IP rights, upgrade of the shipyard, ToT, know-how transfer etc. It was a whole
package, which leaves the only option mentioned above. But if Malaysia sacrifices ToT and know-how:
-Scrap the steel modules and part, recycle equipment, deliver electronics and sensors back, complete through a solution offered by Naval Group -France.