PETALING JAYA: Construction of the littoral combat ships (LCS) is in progress at the Lumut Shipyard, says Armed Forces Pension Fund (LTAT) chief executive officer Datuk Ahmad Nazim Abdul Rahman.
“I can confirm that the construction of the ships is ongoing,” Ahmad Nazim said in a Facebook post on Tuesday (Aug 10).
He said the ships’ hulls could be seen while travelling to Pangkor Island by boat.
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Ahmad Nazim said the contract stipulates that all six ships must be built concurrently, adding that the Lumut Shipyard was huge and had the capacity to accommodate the project.
He also addressed questions on why RM6bil out of the contract value of RM9bil was paid when the first five ships were only 55% complete.
“RM6bil was spent on almost all items needed to procure the equipment needed to build all six ships,” he said, adding that buying the equipment in bulk was a cheaper option.
“A big portion of the expenditure was for the basic design and detailed design that France-based Naval Group came up with,” he said.
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He said each ship would cost around RM1.5bil which is cheaper than what other countries have spent on LCS vessels. To illustrate his point, Ahmad Nazim said Egypt and the United Arab Emirates each spent almost RM1.9bil on one LCS ship of French make.
Comparatively, the United States, which has built a more advanced vessel, spent RM2.4bil.
He said Boustead Holdings had to take over debt-laden PSC Industries Bhd after the failure of the privatisation project for the Navy ships, to rein in losses.
“The takeover includes a major bank debt which is now being footed by Boustead Holdings and Boustead Naval Shipyard (BNS).
“Hence a portion of the LCS funds was used to pay off the debts of PSC. This is in the Public Accounts Committee’s report,” he said.
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Nevertheless, he said the LCS shipbuilding project by BNS has created technical and engineering job opportunities for almost 3,000 engineers and 400 local vendors in several fields with a project value of RM4bil.
He added that the project was put on hold in 2019 and resumed with the cheapest option following a Cabinet decision in April 2022.
“The decision was taken based on three options,” he said.
This included the government scrutinising the restructuring plan of BNS which took about eight months.
LTAT owns BNS, the main contractor for the LCS project, through direct stakes as well as an indirect stake via Boustead Heavy Industries Corporation Bhd (BHIC) and Boustead Holdings Bhd (BHB).
The LCS controversy gained momentum over the past few days after the PAC revealed that none of the ships have been completed so far, although five should have been delivered by this month.
It was previously reported that RM1.4bil worth of government funds intended for the multibillion-ringgit LCS project signed in 2014 was diverted for other purposes.