Guan Eng, MACC to discuss oil pipeline projects with China

Prime Minister Dr Mahathir Mohamad says the project's mode of payment, which is based on timeline milestones, will be reviewed.

Prime Minister Dr Mahathir Mohamad says the decision on the projects made by the previous Cabinet is wrong and not good for the country. (Bernama pic)

PUTRAJAYA: Prime Minister Dr Mahathir Mohamad has instructed Finance Minister Lim Guan Eng and Malaysian Anti-Corruption Commission officials to go to China to engage in discussions with the parties involved in the Multi-Product Pipeline (MPP) and the Trans-Sabah Gas Pipeline (TSGP) projects.

“The project’s mode of payment is based on timeline milestones and it will be reviewed,” he said after the Cabinet meeting here today.

Asked whether the money allocated for the projects might be used to pay 1MDB debts, he said: “We will investigate that, but the idea that we should pay periodically according to time and not according to the progress of the project, is wrong.

“So we want to study why this system was agreed to by the Malaysian government during former prime minister Najib Razak’s tenure.

“They made this decision in the Cabinet, but the decision was wrong and affects us, and is not good for our country and the government.”

Yesterday, Lim revealed that Suria Strategic Energy Resources Sdn Bhd (SSER), a wholly-owned subsidiary of the ministry, was embroiled in a scandal related to the two gas line projects, which were approved by the Cabinet on July 27, 2016.

“The RM9.4 billion scandal, whereby payments made based on timeline milestones and not progressive work done, resulted in RM8.3 billion or 88% of the projects’ total value being paid despite only 13% work completion,” he said in a statement.

The “scandal”, discovered in the “Red Files” of the finance ministry, is suspected to be linked to 1MDB.

The files are said to be previously only accessible by certain parties and not disclosed to the officials and auditors of the ministry.

The 600km multi-product petroleum pipeline connecting Melaka and Port Dickson to Jitra, Kedah, costs 4.53 billion yuan and RM2.53 billion, or a total of about RM5.35 billion.

The TSGP, on the other hand, was to build a 662km gas pipeline from Kimanis Gas Terminal to Sandakan and Tawau, costing 3.08 billion yuan and RM2.14 billion, or about RM4.06 billion in total.

Both projects, amounting to RM9.41 billion, were awarded to China Petroleum Pipeline Bureau (CPPB) on Nov 1, 2016.

The agreements were signed by the then Treasury secretary-general Irwan Serigar Abdullah, who was also chairman of SSER. Irwan resigned on May 23, 2018.

SSER secured funding from China EXIM Bank amounting to 85% of the project’s value on March 22, 2017. The balance 15% of funds required were to be raised via sukuk issuance.

Both the China Exim Bank borrowings and the sukuk were secured with federal government guarantees.

During a briefing to Treasury officials on Monday last week, SSER reported that the three-year projects began in April 2017. -FMT