IJM Corp Bhd’s RM1.12 billion contract for the Light Rail Transit Line 3 (LRT3) project’s underground work packages from Bandar Utama to Johan Setia has been terminated by the project’s turnkey contractor, MRCB George Kent Sdn Bhd (MRCBGK).

IJM Corp told Bursa Malaysia that its wholly owned subsidiary, IJM Construction Sdn Bhd, was served with a notice of termination from MRCBGK on July 8, informing it that the contract for the work packages had been aborted.

The group said the termination was due to the project’s remodelling from a project delivery partnership (PDP) model to a fixed-price contract model, pursuant to the government’s new direction. 

“The new contractual framework has resulted in MRCBGK’s employment as the PDP under the PDP Agreement with Prasarana Malaysia Bhd (project employer) being terminated.”

“Following the termination, and pursuant to the conditions of contract, MRCBGK as the PDP, has issued the notice to IJM Corp,” it said.

IJM Corp, which received a letter of acceptance for the project on March 13 last year for a contract sum of RM1.12 billion, had commenced preliminary works for the project before it was put on hold in June 2018.

The LRT3 project was one of various mega projects that saw its cost revised by Putrajaya.

In July last year, the Finance Ministry allowed the project to continue after reducing its cost by 47% from RM31.65 billion to RM16.63 billion.

IJM Corp said it was considering legal action.

“IJM Corp is currently consulting its advisers and will seek appropriate legal redress under the contract.

“Apart from potential earnings from the project, the termination of the project will not have any significant effect on the financial position of the group,” it said.

IJM Corp’s share price rose 1.25% to close at RM2.43 today, with 254,500 shares changing hands. – July 9, 2019.