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How Energy Division Lead to Major Loss for Sime Darby ...


There are four multimillion Ringgit projects moved into by Energy and Resources division of Sime Darby, nevertheless turned out awful. One of the jobs is collaboration with Qatar Petroleum (QP), the Bulhanine and Maydan Mahzam job. Sime Darby has been awarded a RM265 million deal to build wellhead platforms the place that the scope of works inside the contract addresses three wellhead platforms, installation of about 45 kilometres of pipeline, 23 kilometres of umbilical and alteration to existing platforms.

That started in Apr 2006 and supposedly designed in August 08. However , the division features encountered holds off and cost overruns which usually resulted in losses on the task exceeding RM500 million, which have already been made up. At that time, they still try to negotiate with all the QP project’s client on claims intended for the above budget cost, but the Panel has already chose to reverse the revenue of RM200 mil previously recognized in the Group accounts for Financial Year 2009. The second task is the Maersk Oil Qatar project (MOQ).

Maersk Oil awarded Sime Darby Architectural the EPCIC contract to generate and install a process platform, a utility system and 3 bridges off of the coast of Qatar in February 2007. It was planned for finalization in Oct 2009 yet there have been delays and price overruns with this project which in turn caused failures of RM159 million intended for Financial Season 2010. In respect to Sime Darby, the fee overruns were incurred about transport and installation, and hookup and commissioning works. It is not very clear if the overruns were the effect of under-budgeting, and unexpected increase in raw material costs, or both, or some other cause.

Even though transactions were made with all the client, they will still wasn’t able to probe the losses. The 3rd project related to the MOQ project, which is the construction of vessels to get the MOQ project’s utilization called the Marine Project. MARINE Project was meant to turn Sime Darby Bhd into a major marine vessel player in the coal and oil industry, nonetheless it didn’t end up as designed when they chosen the wrong shipbuilder. The project including building a derrick-lay barge, a pipe-laying ship, a pair of handcuffs handling towing supply, and a pull boat that could send items to overseas oil rigs.

Sime Darby had experienced cost overruns of a lot of RM1. a few billion for any three jobs. And the previous project is a Bakun hydroelectric dam task. The project was tendered to Sime Darby Group along with seven-member pool by the federal government at a total of RM 1 . 788 billion. The Bakun hydroelectric dam job, in which Sime Engineering Sdn Bhd retains a thirty-five. 7% successful interest, was awarded in September 2002 and was scheduled intended for completion in September 3 years ago. However , due to various factors, completion has been delayed and costs have escalated.

There are three innovations affecting the Bakun task. The first is the merger with the Sime Darby, Guthrie and Golden Hope into a fresh entity called Synergy Drive. The second is the proposed takeover of the Bakun project by contractor, Sime Engineering. The 3rd is the resurrection of the submarine HVDC cable connection under the Southern China Ocean to transport electrical power from Borneo to Peninsular Malaysia. These types of four assignments were beneath the former president and four additional senior executives’ control.

They may be Datuk Seri Ahmad Zubir Murshid (CEO), Vice-president Datuk Mohamad Shukri Baharom, key financial expert Abdul Rahim Ismail, brain of coal and oil Abdul Kadir Alias and senior basic manager of Sime Darby Engineering Mohd Zaki Othman. These staff were charged of faltering to carry out a due diligence about all tasks. It also has become reported that they can had neglected findings via KPMG, especially on the deals with MLC shipping Group (construction and sale for four products of point handling dragging supply in RM285 , 000, 000 and building of a derrick lay barge for a amount of RM 295 million) and Puteri Offshore Pte Ltd.

The VP was blamed pertaining to disregarding the due diligence procedure when he would not disclose or perhaps sufficiently featured the fact that he had previously signed deals with MLC and Puteri Offshore. Sime Darby also has completed investigation conduct by the legal and forensic consultants which includes validated the finding wherever they may had been breaches of duties and obligations and inappropriate execute.

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