LTAT CEO explains that all six LCS ships must be built together, RM6b bulk order purchase to save cost

KUALA LUMPUR, Aug 10 — Datuk Ahmad Nazim Abdul Rahman, CEO of the Armed Forces Pension Fund (LTAT) has explained why none of the six Littoral Combatant Ships (LCS) purchased by the government has been completed yet.

Taking to Facebook, Ahmad Nazim said that under the current contract between the government and ship makers, all six ships must be built concurrently.

He said that being privy to the LCS recovery plan, he himself has seen construction of the six ships at the Lumut Shipyard, adding that others can also see the progress of the ships if they take a boat towards Pangkor Island.

"I can confirm that the physical construction of the ships is taking place. If you take a boat to Pangkor, you can see the partially completed hulls of the LCSs.

"Under the current contract, the construction of all six ships must happen all at once. Not build one, deliver one. The Lumut Shipyard is large and has the capacity to build all six ships to completion," he said.

Ahmad Nizam also added that the RM6 billion spent so far was for a bulk order of equipment to build the ships, explaining that this would be cheaper compared to buying equipment individually.

He also said a huge portion of the RM9 billion contract went to the “basic design and detailed design” carried out by the Naval Group, a major player in the French naval sector.

“(A total of) RM9 billion for six ships under the original contract means the price of one ship is approximately RM1.5 billion,” he said.

Ahmad Nazim also pointed out that Egypt and the UAE spent nearly RM1.9 billion for one of their LCS ships while the US built their LCS for RM2.4 billion each as it was more advanced.

He also said some of the money meant for the ships was used to pay off debt incurred by a previous company which Boustead Holdings and Boustead Naval Shipyard Sdn Bhd (BNS) had to cover after taking over the project.

However, Ahmad Nizam also said the LCS project had created job opportunities for almost 3,000 engineers and 400 local vendors in various fields.

Last Thursday, Public Accounts Committee (PAC) chairman Wong Kah Woh revealed that cost overruns of the LCS project totaled RM1.4 billion, with RM400 million used to pay old debts from an old patrol vessel project.

Transparency International Malaysia (TI-M) likened the brewing LCS scandal to 1MDB and said the Malaysian government has now developed a reputation for misappropriating taxpayer monies.

The LCS project is the largest procurement in the history of Mindef with a total cost of RM9 billion.

The said contract began in 2013 with a ten-year time frame and six LCS ships were expected to be built and delivered to the country by the end of 2023.

On August 8, Senior Defence Minister Datuk Seri Hishammuddin Hussein told Dewan Negara that the first of the LCS' purchased from Boustead Naval Shipyard Sdn Bhd (BNS) should be ready no later than two years from now.