THE government has managed to salvage RM5bil from two failed pipeline projects through a loan restructuring agreement with China, reducing the country’s potential losses from RM8bil to RM3bil, says Datuk Seri Anwar Ibrahim.
The Prime Minister said the agreement, signed on Oct 30, would allow RM5bil in loans originally meant for the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects to be redirected towards the Northern Perak-Penang Water Supply Scheme (NPWSS).
“Without this agreement, the government would have faced losses of up to RM8bil, taking into account its obligation to repay loans for the TSGP and MPP projects, which were never completed and yielded no benefits.
“The loan restructuring agreement reduces the country’s losses to RM3bil as we recover RM5bil in value through financing for the new NPWSS development project,” he said in reply to Datuk Jonathan Yasin (GRS-Ranau).
Jonathan had asked about measures to recover the RM8.3bil paid to contractors despite both projects recording only 13% progress.
Anwar said the RM3bil loss arose partly from compensation paid to contractors for preliminary works and other costs incurred.
He said both projects, approved in 2016 under the previous administration, were awarded through direct negotiations to the China Petroleum Pipeline Bureau for a total of RM9.4bil.
“The MPP involved a 600km petroleum pipeline worth RM5.35bil, while the TSGP comprised a 680km gas pipeline in Sabah valued at RM4.06bil.
“Both projects were financed through loans from the Export-Import Bank of China (China EximBank), covering 85% of their value and guaranteed by the Federal Government,” he said.
Anwar said the main reason for the losses was that payments had been made according to a predetermined schedule rather than actual construction progress.
By 2018, about RM8.3bil, or 88% of the contract value, had been paid despite reported progress of only 13%, he noted.
“This was an extremely serious failure of governance.
“Almost the entire contract value had been paid before construction progress was verified.
“Public funds were lost, and the projects were never implemented,” he said, adding that both contracts were subsequently terminated in 2018.
Anwar said attempts to resolve the matter under three previous administrations had been unsuccessful.
Under the latest agreement, the redirected RM5bil would finance water infrastructure benefiting northern Perak and Penang, including treatment plants and irrigation facilities.
He added that construction would be undertaken by local contractors, with stricter governance and monitoring measures to prevent similar failures.
“The Madani government bears the responsibility of resolving inherited problems and safeguarding the country’s interests,” he said.
