MORE than 50% of the RM6 billion disbursed to Boustead Naval Shipyard Sdn Bhd was spent on equipment to outfit five out of the six littoral combat ships, its CEO Azhar Jumaat said.

In a rare media tour of the shipbuilders’ yard in Lumut, Perak, the company showed where all the items were stored and allowed reporters on board the LCS 1 which is still under construction.

“The main point we want to illustrate is that the RM6 billion is not lost or all spent,” Azhar said.

“RM1.7 billion worth of equipment are stored in warehouses here waiting to be installed on the ships.”

“Another RM1.8 billion worth of equipment has already been installed on the five ships which are in various stages of completion.”

When asked where the remainder of the RM2.5 billion went, Azhar said there were other overheads to consider.

“You have to understand you have to pay for overheads, project management, insurance, electricity, construction work.”

“I’m not going to be able to give you a detailed breakdown but it is a fair distribution of costs.”

Of the RM1.7 billion worth of equipment sitting in storage, Azhar said 30% needed to be stored in an air conditioned environment, which is another added cost to the project.

Raw materials such as steel to build the ships are also expensive, he said. 

“Steel alone costs a significant amount. Imagine how many tonnes of steel you will require, this is military grade steel which has a different pricing,” he said.

About RM200 million was also spent to upgrade the yard, Azhar said.

Five ships are now being built concurrently in order to save time, Azhar said.

“It takes about four years to build a ship. If we don’t build it concurrently, it will take 24 years to build the six ships.”

“However, in order for it to be built concurrently, you have to pay concurrently.”

“This is where part of the RM6 billion is being utilised. The money is not being drained out,” he said.

Beside BNS’ financial problem, Azhar said the progress of the ships is being hampered by discussion with the Original Equipment Manufacturer (OEM), the Covid-19 pandemic and supply chain issues.

“Whatever work that can be done by BNS is still being carried out and has not completely stalled,” he said, adding that LCS 1 is about 60% complete.”

“If we were to start work on LCS 1 again soon, it will take another two years for the ship to be completed.”

Azhar assured the public that the ships were indeed real.

On board LCS 1, there were tables stating what the areas were designated for, such as a gymnasium.

There was also equipment such as a hot water calorifier (water heater) and galley distribution panel already placed in the ship but still remained packed. 

Azhar said the final design for the ship is also 95% completed.

“Thirty five local engineers were sent to France for 18-30 months to be trained for the technology transfer. They came back and carried out the detailed design work.”

“What you see is a result of their work. If we are not capable we won’t even arrive at 40% completion.”

“The design has to be approved and quality assurance validated by an internationally renowned third party. 

“After that, it has to go through another validation by the Naval group. The Royal Malaysian Navy also has a say whether the design meets their requirements.” 

“It’s a very complex undertaking by a local company. We would like to set the trend and way forward for the country.”

“For us, it’s realistic and can be done. The spirit of ‘Malaysia boleh’ is always there.” 

“Give us the chance to prove it. I’ve shown you evidence of our work, be objective in your evaluation,” Azhar added. – August 13, 2022.