M'sia, China yet to reach consensus on compensation for cancelled pipeline projects
Malaysia has yet to reach consensus with China over the amount of compensation to be paid relating to two mega pipeline projects despite holding seven discussions between October 2018 and November 2019.
In a parliamentary reply, Finance Minister Tengku Zafrul Abdul Aziz said the payment that can be claimed by China amounted to RM1.2 billion, according to preliminary works carried out by the contractors and verified by local technical experts.
However, he did not reveal the compensation amount for the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects...
Malaysia has yet to reach consensus with China over the amount of compensation to be paid relating to two mega pipeline projects despite holding seven discussions between October 2018 and November 2019.
In a parliamentary reply, Finance Minister Tengku Zafrul Abdul Aziz said the payment that can be claimed by China amounted to RM1.2 billion, according to preliminary works carried out by the contractors and verified by local technical experts.
However, he did not reveal the compensation amount for the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects.
"A meeting between the Malaysian delegation and Chinese government on April 12, 2019, agreed that both MPP and TSGP projects are to be terminated and matters related to the termination cost and compensation to be discussed later.
"This came about after the government decided to review all the ongoing mega projects, including the pipeline projects," Zafrul said.
According to the minister, seven rounds of talks were held in October 2018 and November 2019.
"No agreement has been reached in finalising the compensation for the RM3.47 billion project, which was being disputed (by both sides.
"Based on the verification by local technical experts, the amount that can be claimed by the contractor - China Petroleum Pipeline Bureau (CPPB) - for the preliminary works carried out is merely RM1.12 billion.
"As such, there is a dispute on the difference in the amount that can be claimed by CPPB... Both countries are still engaged in talks to find other alternatives to achieve a win-win situation," Zafrul added.
He was responding to DAP's Kota Kinabalu MP Chan Foong Hin who asked the government to reveal the outcome of the discussion and compensation amount with the termination of the pipeline contract.
In June, Pakatan Harapan accused the former administration of inking a lopsided contract, where contractors were paid RM8.3 billion or 88 percent of the total contract value of RM9.3 billion, even though only 13 percent of the projects were completed.
The projects were undertaken by Suria Strategic Energy Resources (SSER) - a fully-owned subsidiary of the Finance Ministry set up specifically for the projects on May 19, 2016. They were awarded to CPPB in November 2016 and work started in April 2017.
SSER also secured funding from China EXIM Bank amounting to 85 percent of the project value on March 22, 2017. The balance of the 15 percent of the funds required were to be raised via sukuk issuance. Both the China EXIM Bank borrowings and the sukuk are secured with federal government guarantees.
The government had pledged to retrieve the RM8.3 billion that was paid to CPPB.
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