KUALA LUMPUR: The Defense Ministry clarified that the increase in the cost of the littoral combat ships (LCS) by another RM2 billion is for the type of missile to be fixed on the ships.
Its minister Datuk Seri Mohamad Hasan said that the initial design of the ships did not include the type of missiles.
Once it was fixed based on advice by the Navy, he said that the government allocated the additional funds to procure the missile system.
"The additional RM2 billion is not an overrun cost, but it is additional funding for the combatant asset.
"The missile alone costs RM1.029 billion, and then there are other costs such as interests, insurance, design, and others.
"When it was done before, the type of missile was not identified," he said during the winding-up speech of the ministry's 2024 Supply Bill (2024 Budget) committee-level debate at Dewan Rakyat today.
He also said that the government decided to proceed with only five ships as they have bought five sets of the main parts of the ships, including the engines, gearboxes, propellers, and others.
He said that if the government were to proceed with the initial plan for the sixth ship, the total cost could balloon further.
He also said that the government decided to maintain the contractor, Boustead Naval Shipyard Sdn Bhd, for the project to save time and cost.
"If we go ahead with a new company, then the cost might escalate, and it will take more time to complete it.
"Imagine if the new contractor said they do not want the engine we have now; then we have to face more cost for another (engine)," he added.
The controversy surrounding the RM9.128 billion contract — the largest single deal in the Defense Ministry's history — blew up when there were significant delays in the project.
Six LCS vessels were ordered, and five should have been delivered by August last year, but not a single one had appeared.