GEORGE TOWN: Chief Minister Lim Guan Eng again clarified the Penang Development Corporation's (PDC) tender clause that allows the termination of awarded contracts by the PDC chairman following Prime Minister Datuk Seri Najib Razak's statement that such clause could lead to abuse of power.

At a press conference, Lim said Najib could have been given a false picture and was misled by some irresponsible parties.

"This is a simple administrative measure to protect the people's interests, PDC and the state government from possible manipulation, malpractice and even corruption in the interim period after the contract is awarded and before it is signed, which could take up to three months.

"If I am not wrong, I was told that even the government-linked companies (GLCs) and also large corporations adopt this clause as a form of protection.

"It is a standard practice internationally. This clause would also ensure that in the event any contract is terminated due to some circumstances, the contractor will only be liable to seek compensation for costs and not loss of anticipated earnings.

"An example is the Tang Hak Ju case, where the costs would only have to be RM1 million, but the state government is liable to pay up to RM40 million in loss of earnings," Lim added.

He said he was perplexed as to why the matter was being blown out of proportion, as to date no contracts have been terminated.

"Neither the state government nor PDC has yet to receive any complaints from the contractors themselves, so why is a simple administrative procedure being made into a big issue?

"I believe the prime minister has been wrongly advised on this matter, hence his statement that it was an abuse of power on my part."

He also said that the clause was not included in the contracted agreement but only upon tender award as there were other provisions in the agreement to govern causes of termination.