MoF: Three mega projects worth RM92 billion suspended

(Sun Daily) – The Ministry of Finance (MoF) has issued suspension orders for all contracts related to three projects, namely East Coast Rail Link (ECRL), Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP), worth a total of RM92.1 billion.

Prime Minister Tun Dr Mahathir Mohamad, after seeking advice from the Attorney General, instructed MoF to issue a suspension notice through MoF Inc for all contracts related to MPP, TSGP, and ECRL on July 3. The services and operations suspension is in place until further notice.

“The decisions are solely directed towards the related contractors relating to the provisions mentioned in the agreements, and not at any particular country,” Finance Minister Lim Guan Eng said in a statement issued today.

The statement comes after weeks of speculation on whether the government would proceed with the lopsided deals.

MPP and TSGP, which are under Suria Strategic Energy Resources Sdn Bhd (SSER), will cost the government RM11.1 billion.

According to the statement, SSER contracts totalling RM9.4 billion for the two projects do not take into account cost related to land acquisition, two expert consultancy agreements, and a maintenance agreement, which comprise a total additional cost of RM1.7 billion.

MPP and TSGP, with a total construction cost of RM9.4 billion, were awarded to China Petroleum Pipeline Bureau on Nov 1, 2016.

SSER has paid RM8.3 billion or 88% of the projects’ construction value of RM9.4 billion, even though progressive work completion (that has not been audited) is only at 13%.

ECRL, a railway line that stretches from Port Klang to Pengkalan Kubor, Kelantan, will cost the government RM81 billion. The sum includes land acquisition cost and loan interest during the project’s construction.

The rail project is made up of two phases. Phase 1 (Gombak to Wakaf Bharu), was approved in 2016 and Phase 2 (Gombak to Port Klang) was approved in 2017 by the then Cabinet. China Communications Construction Company was appointed as the main contractor.