Najib: Scrapping ECRL project won't result in recouping RM10bil

A sign at the front entrace of the ECRL project in Bentong, Pahang, which has officially ceased after Prime Minister Tun Dr Mahathir Mohamad announced the project's cancellationon Aug 21.

PETALING JAYA: Former prime minister Datuk Seri Najib Tun Razak has dismissed the Finance Minister's statement that Malaysia will be able to recoup RM10.02bil if it cancels the East Coast Rail Link (ECRL) project.

He said if the project was cancelled, EXIM Bank of China, which funded the ECRL with a 20-year soft loan, would cancel the loan and would move to recover the RM19.6bil paid to the project contractor, China Communications Construction Co Ltd (CCCC).

“The project is being financed by a 20-year soft loan from China’s Exim bank and all payments to CCCC thus far came directly from the bank. 

“If the project is cancelled now, the bank (Exim Bank of China) will cancel the loan and move to recover the amount.

“It is unlikely that Malaysia will recover the RM10bil as this will be refunded to Exim Bank, but we will be required to repay the remaining RM9.6bil which Exim Bank has already paid.

“Did the government take this into account and provide funds to make this payment?” Najib asked in his Facebook post.

Najib was responding to Minister Lim Guan Eng who, on Monday (Oct 22) said that the government will be able to recover RM10.02bil in the event that the ECRL project, which is 20 percent completed, is scrapped.

Lim reportedly said the sum represented payments made to CCCC totalling RM19.68bil as advance and progressive payments up to Feb 15 this year.

"It must be stated that Malaysia Rail Link Sdn Bhd (MRL) will be able to recover RM10.02bil in advance payments from CCCC if the project is cancelled.

"Thus, in the worse case scenario, the Government can get back RM10bil out of the RM19.68bil that was paid," he said when answering a question by Tan Sri Noh Omar (BN-Tanjong Karang) at the Dewan Rakyat.

Najib, in his post, went on to talk about the economic benefits of the project, not just in terms of development in the east coast states, but also the close relationship between Malaysia and China which brings mutual benefit.

These include in terms of oil palm exports to China, and the influx of Chinese tourists to Malaysia.