KUALA LUMPUR: The government is still facing an estimated RM3 billion in losses from the abandoned Trans-Sabah Gas Pipeline (TSGP) and Multi-Product Pipeline (MPP) projects, despite reaching a RM5 billion loan restructuring agreement with China, says Prime Minister Datuk Seri Anwar Ibrahim.
He said the agreement, signed on Oct 30, would reduce the potential losses from RM8 billion to RM3 billion by redirecting RM5 billion in financing to the Northern Perak-Penang Water Supply Scheme (NPWSS).
Without the restructuring, Putrajaya would have remained liable for loans taken to finance the two pipeline projects, which were never completed, he told the Dewan Rakyat on Tuesday, as reported by The Star.
Anwar was responding to Datuk Jonathan Yasin (GRS-Ranau), who asked about efforts to recover RM8.3 billion paid to contractors despite the projects achieving only 13% progress.
The two projects were approved in 2016 and awarded through direct negotiations to China Petroleum Pipeline Bureau for a combined RM9.4 billion. The MPP involved a 600km petroleum pipeline costing RM5.35 billion, while the TSGP comprised a 680km gas pipeline in Sabah valued at RM4.06 billion.
Both projects were financed through loans from the Export-Import Bank of China, which covered 85% of their value and were guaranteed by the Federal Government.
Anwar said payments had been made according to a predetermined schedule rather than verified construction progress. By 2018, about RM8.3 billion, or 88% of the total contract value, had been paid, although reported progress stood at just 13%. He said the progress figure had not been audited or verified.
The contracts were terminated in 2018, following what Anwar described as a serious governance failure.
Under the restructuring agreement, the RM5 billion financing will support water infrastructure, including treatment plants and irrigation facilities, benefiting northern Perak and Penang. Local contractors will undertake the works, with tighter monitoring and governance measures in place.
Anwar said the government remained responsible for resolving inherited issues and protecting national interests.