Controversy as RM4bil Sabah gas pipeline project revived

 

The Trans-Sabah Gas Pipeline project was cancelled in 2018 after it was discovered that 88% of the cost had been paid despite only 13% of the work being completed. (Bernama pic)

KOTA KINABALU: Questions are being raised over the revival of a multi-billion ringgit project in Sabah that was scrapped by the Pakatan Harapan (PH) administration in 2018.

The scrapping of the Trans-Sabah Gas Pipeline (TSGP) project was widely reported at the time, though its revival by the Perikatan Nasional-led government was only recently revealed in Parliament.

DAP’s Kota Kinabalu MP Chan Foong Hin was the first to highlight the issue after learning the project was back on track following a written parliamentary answer from finance minister Tengku Zafrul Abdul Aziz.

Chan had asked about the outcome of negotiations between Putrajaya and China, including the amount of compensation for the cancellation of the TSGP.

FMT takes a closer look at what the TSGP issue is all about.

What is the TSGP?

The RM4.06 billion TSGP project was initiated in 2016 under the Barisan Nasional (BN) administration. It involves laying 662km of gas pipelines from the Sabah oil and gas terminal in Kimanis on the state’s west coast to the east coast districts of Sandakan and Tawau.

The job of developing TSGP and another project called the Multi-Product Pipeline (MPP), aimed at connecting petrochemical projects in Melaka and Negeri Sembilan to Kedah, was given to China Petroleum Pipeline Bureau (CPPB).

The combined value of the TSGP and MPP was RM9.4 billion.

What happened when PH came to power?

Following the change of government in Putrajaya in May 2018, then finance minister Lim Guan Eng revealed that some 88% of the project value of TSGP and MPP had been paid out to CPPB despite only 13% of the work being completed.

In August 2018, then prime minister Dr Mahathir Mohamad announced the cancellation of the TSGP and MPP projects, citing the government’s fiscal position. It was subsequently reported that Putrajaya was negotiating with the Chinese government to retrieve the RM8.3 billion paid out to CPPB.

TSGP’s revival

In a written reply in the Dewan Rakyat earlier this month, Tengku Zafrul revealed that the previous PN-led government had, on Feb 10, 2021, decided to revive the TSGP.

As for the MPP, the finance minister said further studies and negotiations will be carried out with the CPPB to decide on the direction of the project.

He added that in line with the Cabinet’s decision in February, the finance ministry and its wholly-owned subsidiary, project owner Suria Strategic Energy Resources Sdn Bhd (SSER), began discussions with CPPB.

Both sides, he said, had agreed to resume the project and were now in the midst of finalising the new terms and conditions.

Questions and concerns

Chan says while the TSGP’s aims are noble, there are serious concerns over the lack of transparency on the project.

“How could Malaysia agree with terms that payments are made not according to the progress of the project?” he said, adding this was among the reasons why the project was scrapped in the first place.

“The biggest issue here is that the payment was made first but work is to be done later.

“How would the federal and Sabah governments monitor the work to be carried out as the payment was done not according to the progress made?”

Chan has also questioned if the state government had been consulted on the resumption of the project. The state government has yet to comment on the issue.

Meanwhile, Lim, who is DAP secretary-general, has also slammed the revival of the project, saying the party was “shocked” over the previous administration’s decision.

He alleged that those responsible for the project’s initial implementation had “betrayed” the country’s financial interests and that they should be punished.

Lim urged Prime Minister Ismail Sabri Yaakob, who was the defence minister in the previous Cabinet, to “come clean” on his role then and to ensure that the country’s financial interests are protected.

“Failure to do so would show that Ismail Sabri is no different from his predecessors in closing a blind eye and even trying to cover up such financial crimes.” - FMT