Malaysia Airports says yet to get approval to test new $1.2 bln terminal

KUALA LUMPUR Tue Feb 4, 2014 10:06pm EST

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KUALA LUMPUR Feb 5 (Reuters) - Malaysia Airports Holding Bhd said it has yet to receive approval, expected by January-end, to start testing its new $1.2 billion budget airline terminal, potentially delaying opening for the sixth time in more than three years.

Malaysia Airports initially planned a September 2011 opening for its Kuala Lumpur International Airport 2 (KLIA2), to add to its current terminal for low-priced travel which operates far beyond its 15 million passenger capacity.

The project suffered a series of delays caused by, for instance, a dispute over facilities with AirAsia Bhd, Asia's biggest budget carrier, and the decision to raise capacity to 45 million passengers from 30 million passengers.

In July, the government set an opening date of May 2, 2014, and established a committee to monitor the project where costs have nearly doubled to 3.9 billion ringgit from an initially estimated 2 billion ringgit.

Malaysia Airports was due to receive a Certification of Completion and Compliance on Jan. 31 from UEMC-Bina Puri JV, a joint venture of UEM Group and Bina Puri Holdings Bhd tasked with building the terminal.

Receiving certification would enable Malaysia Airports to begin the minimum required three months of testing for operational readiness.

"All efforts are being taken to support UEMC-Bina Puri JV towards the completion of the terminal building to enable the opening of KLIA2 on 2nd May 2014," Malaysia Airports said in a statement to the stock exchange on Tuesday.

UEMC-Bina Puri JV, in a separate statement, said "an unexpected issue" had arisen during an inspection which it was addressing.

Inspectors had found 65 percent of the terminal did not meet safety standards, local media reported on Wednesday.

Shares of Malaysia Airports were 1.4 percent higher on Wednesday after falling more than 3 percent on Tuesday.

($1 = 3.3285 Malaysian ringgit) (Reporting by Niluksi Koswanage; Editing by Christopher Cushing)

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