How do we save the multibillion Offshore Patrol Vehicle (OPV) project?

The Government should announce the strategy to save the multibillion Offshore Patrol Vehicle (OPV) project which is an abysmal failure of privatization.

Parliamentary question by Dr Tan Seng Giaw, DAP National Deputy Chairman and MP for Kepong on the dilemma of completing the six OPV, the original cost of which is RM5.35 billion. The Finance Minister (2) Senator Tan Sri Nor Mohamed Bin Yakop was answering questions on his ministry during the debate on the Supplementary Supply Bill on 27 September, 2005.

For months, the Public Accounts Committee, Opposition Leader Lim Kit Siang and other MPs have been voicing their concern on the OPV issue. The Government claims tremendous success on privatizations since 1983. OPV project is a monster.

In December, 1995, the Finance Ministry signed a contract with Penang Shipyard Corporation (PSC) to privatize Lumut Shipyard and to build 27 units of OPV. On 1 August, 2005, the first six units of OPV were given to PSC-NDSB with the total cost of RM5.35 billion and with a down payment of 20%. The Government has paid 72%, that is, RM3.839 billion by May, 2005.

PSC-NDSB which is a subsidiary of PSC has a cash flow problem. It has asked for extra payment of RM260 million to complete the first two vessels, PV1 and PV2. But officers from the Royal Malaysian Navy (TLDM) say it only needs RM145 million.

According to the contract, PV1 was due to be completed by September, 2005. PSC-NDSB expects it to be completed by September, 2005 while the Defence Ministry says it is December, 2005. PV2 was supposed to be completed by May 2005; PSC-NDSB believes it to be October, 2005, whereas the Ministry thinks it will be April 2006.

PV1 and PV2 may cost RM2 billion each. If it were to be RM2 billion, we can get a destroyer.