Contracts to build Incinerators in Langkawi, Pangkor, Cameron Highlands and Tioman were awarded to a company controlled by a former Navy chief which used an unproven technology

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 23rd of December, 2013 in Kuala Lumpur

It was reported in the National Audit Report 2012 that contracts to build incinerators in Langkawi, and Pangkor were given, via direct negotiations, to Syarikat XCN Technology Sdn Bhd (XCNT) in June 2007. At the same time, the contracts to build incinerators in Tioman and Cameron Highlands were awarded, again via direct negotiations, to Syarikat Sumur Mutiara Sdn Bhd in August 2007 which then gave these contracts to XCNT.

State Place Capacity (Ton / Day) Value of Contract (RM million) Lateness including extensions (Days)
Kedah Pulau Langkawi 100 68.40 797
Perak Pulau Pangkor 20 20.34 286
Pahang Pulau Tioman 15 22.80 996*
Pahang Cameron Highlands 40 42.20 533
Total 175 153.74

(*) Not completed as of 6 May 2013

The National Audit Report 2012 highlighted the fact that all of these projects faced significant delays in construction and operational deadlines. In fact, the Pulau Tioman incinerator had not been completed as of the 6th of May, 2013, a delay of close to 1000 days (and counting)!

As far as public records show, XCNT did not have any prior experience to constructing and operating incinerators prior to being awarded these contracts. What was not revealed by the National Audit Report 2012 was that XCNT is controlled by Dawn Holdings Sdn Bhd (51%) which in turn is controlled by Tan Sri Abdul Wahab bin Haji Nawi, who was the Chief of Navy from 1986 to 1990[1] (hence the name of the company – XCN – ex Chief of Navy) and also his family.

The remaining 49% is owned by Clean Earth Technology Sdn Bhd, which is controlled by 3 Khoos (Gideon, Caleb and Priscilla) who are also directors in XCNT. The 3 Khoos filed an international patent in 2009 for a new incinerator technology based on autogenous burning which was then used by XCNT for these 4 incinerators. It was an unproven technology when these contracts were given to XCNT and the National Audit Report found that the incinerator in Pangkor was not burning autogenously as it failed to achieve the minimum required 850°C temperature.

I call upon the Minister for Urban Well-Being, Housing and Local Government, Dato’ Abdul Rahman Dahlan to respond to the following issues:

(i)                Explain why his predecessors gave these contracts to a company – XCNT – without a track record in building and operating incinerators.

(ii)              Explain why the autogenous burning technology was chosen even though it was an unproven technology at the time of the award.

(iii)             Assure the public that the operational problems in these incinerators have not resulted in dioxins being released to the atmosphere in these areas.

(iv)             Provide a status update of the 100 ton / day incinerator project in Labuan that was awarded to XCNT through direct negotiation on 25 January 2013 and explain why XCNT was given this contract despite the many delays in the construction and operations of the 4 incinerators named above.

(v)              Provide an estimate of the operational costs for the 4 incinerators mentioned above to assure the rakyat that these costs are not exorbitant.

If the Ministry of Urban Well-Being, Housing and Local Government cannot even oversee the construction and running of 4 small scale incinerators that are below the capacity of 100 tons / day in a cost-effective, timely and transparent manner, what gives the Ministry confidence that it can successfully oversee the construction and running of the proposed 1,000 ton a day incinerator in Taman Beringin in Kepong?

P.S. An earlier version of this press statement stated that a 100 ton / day incinerator project in Labuan that was awarded to XCNT through direct negotiation on the 25th January, 2013. In actual fact, this project was awarded to XCNT in October 2008 through direct negotiations but was cancelled on the 25th of January 2013.