Datuk Seri Mohamed Khaled Nordin, Minister of Defense. - BERNAMA file photo
Mac 14, 2024
LCS: RM7.02 billion has been paid by the government to date - Minister of Defence
KUALA LUMPUR: The government has paid a cumulative sum of RM7.02 billion for the controversial littoral combat ship (LCS) project, Defense Minister Datuk Seri Mohamed Khaled Nordin revealed in Parliament on Wednesday.
The figure is 62.49% of the total project cost amounting to RM11.22 billion, paid according to the stipulated contract, said Khaled in a written parliamentary response to Datuk Seri Ikmal Hisham Abdul Aziz (PN-Tanah Merah).
Ikmal asked about the government's latest cost for the LCS project and whether it included the debt of Boustead Naval Shipyard Sdn Bhd (BNS), now known as Lumut Naval Shipyard (Lunas).
In his response, Khaled explained that BNS's debt is outside the jurisdiction of the Ministry of Defense and is subject to the management of the new company that will take over BNS.
Khaled also said the construction of the LCS resumed after signing the sixth additional contract on May 26, 2023.
As of January 2024, progress on the project — including design, construction, equipment and testing — reached 67.57%.
The LCS project has been in the spotlight in recent years due to delays and cost overruns, with the initial budget of RM6 billion rising to RM9.18 billion and finally reaching RM11.22 billion.
The delivery target of six ships was also reduced to five, with a revised delivery schedule set for August 2026, April 2027, December 2027, August 2028 and April 2029.
The prolonged delay caused the government to intervene and acquire BNS at a price of RM1 through the Ministry of Finance's special purpose vehicle, Ocean Sunshine Bhd.
In a separate parliamentary written reply to Ikmal, Khaled announced that the Ministry of Defense is procuring Littoral Mission Ship Batch 2 (LMSB2) for the Royal Malaysian Navy through direct negotiations with a Turkish government-linked company, Savunma Teknolojieri Muhendislik (STM), using a government-to-government approach ( G2G).
"The approval from the Ministry of Finance was obtained on Jan 18, 2024. After that, the Ministry of Defense issued a letter of intent to STM on Feb 5. STM responded on Feb 8, expressing readiness to negotiate with the Ministry of Defence," said Khaled.
He added that the ministry is currently in the detailed negotiation stage regarding the specifications offered and will further carry out price negotiations before finalizing procurement
