NGV Tech Sdn Bhd has bid for a contract to supply six corvettes to the Royal Malaysian Navy (RMN). The company, a local shipbuilder, ran into financial difficulties while building two training vessels for the RMN.

NGV Tech has partnered Naval Marine Engineering & Logistics Sdn Bhd (NMEL), which lists the crown prince of Pahang Tengku Abdullah Sultan Ahmad Shah as a major shareholder.

“NGV Tech is back with a stronger shareholder set, which includes the royal family of Pahang. With the new shareholders, NGV Tech, through NMEL, will be a strong contender for the contract to supply the corvettes to the RMN,” says an industry observer.

According to a Yonhap News Agency report on Nov 24, 2014, South Korea’s Daewoo Shipbuilding & Marine Engineering Co (DSME) has an order from the RMN for six corvettes to be deployed from 2018.

Three of the patrol vessels will be built in South Korea, while the other three will be assembled here, in a partnership with NMEL, which is the local agent for DSME.

NMEL is 35%-owned by Gading Sari Holdings Sdn Bhd, which is majority-owned by Tengku Abdullah. Other shareholders of NMEL include Mohammad Hafiz Abu Bakar (35%) and Datuk Mohamed Moiz Ali Moiz (30%), through Flagship Logistics & Engineering Sdn Bhd.

NMEL states on its website that it is in partnership with NGV Tech, which is the main contractor. NGV Tech will provide facility management — the infrastructure and immovable facilities for shipbuilding, ship repair and maintenance activities at its planned shipyard in Tanjung Agas, Pekan, Pahang.

NMEL also states that it has leased 200 acres of land in Tanjung Agas for the shipyard for 30 years, with an option to extend. The company lists the RMN as its client. It also lists Remontowa Marine Design & Consulting, a Polish marine and offshore design company, and DSME as its partners.  

The contract to build and commission the six corvettes, however, requires the approval of the federal government. Both NMEL and DSME have not disclosed the value of the deal.

Defence industry observers estimate the cost of building one vessel at RM600 million, depending on the armaments and technology used. DSME revealed the corvette model during the Defence Services Asia exhibition held in Kuala Lumpur last year.

The Ministry of Defence and NMEL had not responded to queries from The Edge at the time of writing.

NGV Tech’s financial difficulties

In 2010, NGV Tech, then helmed by Zulkifli Sharif, was awarded the contract to build two training ships for the RMN for a contract value of RM294 million. The project was also a partnership between NGV Tech and DSME, with DSME providing the technology.

The vessels were supposed to be delivered at the end of 2013. However, NGV Tech’s assets were reportedly seized by bankers after it ran into financial difficulties, jeopardising the commissioning of the vessels. NGV Tech’s shipyard was then in Sijangkang, Banting, Selangor.

According to industry observers, a new shipyard has been appointed to complete and commission the vessels, named Gagah Samudera and Teguh Samudera. However, no announcements have been made by the government on this yet.

NGV Tech’s financial difficulties then could have been due to its rapid expansion in 2009. The company had extended its shipbuilding operations into Batam, Indonesia, and had plans for a 100-acre shipyard in Brazil to serve the booming oil and gas industry there.

Financial information on NGV Tech is scant. Its latest filing with the Companies Commission of Malaysia is for the financial year ended June 30, 2007. The company made RM17.83 million in FY2007, on the back of RM207.2 million in revenue.

In an interview with a local newspaper in 2009, NGV Tech executive chairman Zulkifli said the company had RM2 billion in orders, and projected a turnover of RM900 million that year. It was also reportedly acquiring a 66% interest in South Korean shipbuilder TKS Co Ltd for US$76 million (RM271.97 million at current rates).

Although the contract for the six corvettes has been reported in South Korean media, there is no official word on it from the government or the RMN.

Contracts for the supply vessels to the RMN have been fraught with delays and budgetary issues.

Previously, PSC-Naval Dockyard Sdn Bhd (PSCND), a subsidiary of the now defunct Penang Shipbuilding Corp Bhd (PSC), was awarded the contract to build six vessels at a cost of US$270 million each in September 1998. This was part of the RMN’s plan to acquire 27 vessels to modernise the service, under its New Generation Patrol Vessel (NGPV) programme.

The contract was plagued by setbacks, with the first hull completed by PSCND failing its pre-delivery sea trials due to technical problems and quality issues. It was also beset by financial irregularities at PSCND, with budget overruns and suppliers not being paid.

The government eventually intervened to salvage the NGPV programme from further delays and cost overruns. PSCND was later acquired by Boustead Holdings Bhd in 2005, and renamed Boustead Naval Shipyard Sdn Bhd.

This article first appeared in The Edge Malaysia Weekly, on January 12 - 18 , 2015.

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