Published August 27, 2008

Scomi-Larsen JV clinches RM2.5b job

By S JAYASANKARAN
IN KUALA LUMPUR

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MALAYSIA'S Scomi Engineering, which is in a joint venture with India's Larsen & Toubro Ltd, is believed to have bagged a RM2.5 billion (S$1.1 billion) job to build a 20-kilometre monorail in Mumbai.

'We haven't got a letter as such,' a company official told BT. 'But the government is only talking to us now and they want some clarifications on cost.'

The award is a triumph of sorts for Scomi as it has beaten off such global competitors as Bombardier, Hitachi and Siemens in an international, open tender.

It will also be something of a vindication as the company's critics in Malaysia, including former prime minister Mahathir Mohamad, had repeatedly accused the company of benefiting from its links to Prime Minister Abdullah Ahmad Badawi. Scomi Engineering and its parent - oil and gas company Scomi Berhad - are part-owned by Kamaluddin Abdullah, a Cambridge-trained lawyer who is the premier's only son. Getting the job could also strengthen Scomi's hand in positioning itself as a global player in building monorail systems.

After all the pre-qualification exercises, the bids were winnowed down to two, pitting the Scomi-Larsen consortium against a consortium comprising Anil Ambani's Reliance Energy Ltd and Japan's Hitachi Ltd, according to a news report out of India. Both submitted their final bids in late July and actual construction is slated to begin in May next year.

Scomi Engineering's partner Larsen & Toubro is the largest engineering concern in India and is capitalised at over US$8 billion. The joint venture bid, apparently, won the favour of the Mumbai authorities because the consortium had promised to complete the first phase of the project in two years whereas the others could not make those guarantees.

For all that, however, the news has done very little for Scomi Engineering's shares. It has fallen steadily from its high of RM2.60 in January this year to RM0.89 at the close of trading yesterday.