Boustead seals sixth supplementary contract to revive littoral combat ships project

LANGKAWI - Boustead Holding Bhd’s (BHB) Boustead Naval Shipyard Sdn Bhd (BNS) has sealed a sixth supplementary contract with the Defence Ministry.

The agreement, among others, details project deliverables and governance of reviving the littoral combat ships (LCS) project, said BHB chairman Datuk Nazim Rahman.

"This agreement resulted from the thorough review of multiple options and all aspects of the project by various ministries and agencies under the government and BNS.

"The contract’s sole aim is to revive the LCS project, which is in line with the Armada Transformation 15 to 5 Plan by the Royal Malaysian Navy,” he said in a statement.

Nazim and the Defence Ministry secretary-general Datuk Seri Muez Abd Aziz signed the supplementary contract at the Langkawi International Maritime and Aerospace exhibition (Lima ’23) today.

It was witnessed by Defence Minister Datuk Seri Mohamad Hasan.

Under this agreement, various preventative measures have been put in place to ensure that the ships will be delivered on time and within the allocated budget, Nazim noted.

He said this includes the formation of a project monitoring committee, co-chaired by the secretary general of the Treasury and secretary general of the Defence Ministry, to strengthen the execution and supervision of the project delivery to ensure the failures of the past do not happen again.

Meanwhile, in a Bursa Malaysia filing today, BNS said the company and the Defence Ministry have finalised negotiations on the resumption of the contract and both parties have signed a Sixth Supplemental Contract (SA6).

The SA6 is to vary the contract, among others, with the salient terms and conditions that the resumption of all design and construction activities shall commence upon signing the SA6.

It said the LCS Vessels are reduced from six units to five units.

"The duration of the contract shall be extended with the first vessel to be delivered, fully tested and trialled in August 2026 and the fifth vessel in April 2029,” said BNS.

It added that the total contract price is revised to RM11.2 billion following, among others, the approved change of specifications and extension of time; and the terms of payment is varied from milestone activity to progress of works reflecting the various elements in the contract based on weightage to the design, equipment, construction and trials and commissioning. - BERNAMA