Impact of Insolvency of Main Contractor for MRT Downtown Line

Ms Sylvia Lim asked the Minister for Transport what are the expected implications regarding the schedule and cost of works of the Downtown Line arising from the insolvency of Alpine Bau GmbH who is the main contractor for three upcoming stations on that MRT line.

Mdm Speaker, I understand that Mr Christopher de Souza1 had also filed a similar question on this issue and so I hope that my answer would also help to shed some light on what is happening in your part of the constituency.

Alpine, which is the main civil contractor for two of the contracts on Downtown Line Stage 2 unexpectedly filed for insolvency on 19 June this year. The contracts are for the construction of King Albert Park, Sixth Avenue and Tan Kah Kee stations and they include the tunnels that connect these stations to Botanic Gardens.

Following Alpine's insolvency, LTA's immediate priority was to ensure the safety and security of the worksites and equipment. Partially completed structures were secured and specialists were called in to maintain the tunnel boring machines and the recharge wells. LTA worked with MOM to ensure that Alpine's workers were properly looked after. While all works on site have been suspended, LTA has appointed subcontractors to ensure safety on site and to carry out maintenance of the machines and recharge wells before new contractors are appointed.

Following this, LTA will need another few weeks to assess the full impact to the work schedule and cost implications. Unfortunately, given these circumstances, there will be a delay to the Downtown Line Stage 2 project timeline, as well as additional costs to be incurred to complete the outstanding works, as new contractors would need to be appointed. LTA will do everything possible to keep the delay to the minimum possible, but we will need some time to properly assess what this delay will entail and also the additional cost involved. In the meantime, let me assure Members that we would want to try to

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keep the completion of the Downtown Line project with as little delay as possible because this is, certainly, a key priority for the Ministry.

Thank you, Madam, two supplementary questions for the Minister. First, I understand that in some other countries like Norway where Alpine Bau has got some works, there is an option being explored about whether they could resume works even though they have filed for insolvency. Am I reading the Minister correctly that that option is not being pursued, in other words, the contracts with Alpine have been terminated by LTA?

And the second question is, since there is going to be additional costs incurred, is there any contractual provision by Alpine, for example, some performance bond or guarantee, where we could recoup back some of these additional costs for their non-performance?

The Member is right that we have terminated their contracts. There is no option for them to come back nor do we believe that they have the ability to do so.

On the options available to us, we, of course, will file our claims with the insolvency administrator at the right moment. The due date is, I believe, in the middle of August. In the meantime, we hold quite a significant sum of money as a result of the performance bond, the retention sum and works that had been completed, but we have not yet been able to make payment to Alpine. So, we do have some money under LTA that rightfully would have belonged to Alpine if the project had been completed to our satisfaction.

Certainly, I share those same concerns because my constituency is on the other side of the same road. So, believe me, I have great,

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great interest to make sure that any delay is kept to the minimum possible, because we know it affects the residents, we know it affects the students. We want to reinstate Bukit Timah and Dunearn Roads as quickly as possible. And therefore, LTA is looking at all means available to it to keep the disruption to the minimum and the delay to as short a time as possible.