Finance ministry forms SPV to take over BNS as subsidiary

The finance ministry has established a special purpose vehicle to take over the company responsible for the littoral combat ship (LCS) construction project, Boustead Naval Shipyard Sdn Bhd (BNS), as a subsidiary.

Defence Minister Mohamad Hasan said the LCS project would still be monitored by the project monitoring committee jointly chaired by the treasury secretary-general and the defence ministry secretary-general.

"In addition, periodic reports to the Cabinet will be prepared in accordance with the conditions set by the auditor-general, and periodic reporting to the Parliament through the Public Accounts Committe (PAC) will be done at least once every three months to ensure that the project can be monitored by all parties.

"This is necessary for us to achieve our intentions to continue the construction of the LCS as required by the Royal Malaysian Navy (RMN) and the Malaysian Armed Forces," he told reporters after the signing of the sixth additional contract between the defence ministry and BNS today.

The LCS project became embroiled in controversy after PAC revealed that not a single ship had been completed even though the government had paid BNS RM6.083 billion.

Mohamad added that PAC was welcome to monitor the progress of the ship construction. He said the committee would receive reports based on their schedule and they could make a report to Parliament if they were unsatisfied. 

PAC previously suggested the holding of new proceedings on the project’s progress, to begin as soon as the Dewan Rakyat approved the appointment of PAC members at the second parliamentary session which began on May 22.

Mohamad said the government had also agreed to continue with the second-generation patrol vessel procurement for the navy and that the navy, along with the defence ministry and BNS, would focus on ensuring that the LCS project was successful.

"The procurement is vital to boost our armada’s capabilities in line with the RMN 15 to 5 Transformation Plan to preserve the sovereignty of our country’s waters," he said.