Monday 25 Sep 2023
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KUALA LUMPUR (July 17): The government is still in negotiations with parties involved in the Trans-Sabah Gas Pipeline (TSGP) over the reclamation of monies paid for the project and the amount of compensation to be paid based on completed works.

In a response to a question in Dewan Rakyat from Chan Fong Hin (PH-Kota Kinabalu) on the progress of government efforts to reclaim the RM3.54 billion paid out for the project, Finance Minister Lim Guan Eng said the government is still in discussions, adding that Ministry of Finance (MoF)-owned company Suria Strategic Energy Resources Sdn Bhd is in talks with the project's contractor China Petroleum Pipeline Ltd (CPP) and the project's financer China Exim Bank.

"At the same time, ongoing negotiations are being held by the government with the Attorney General's Chambers taking the lead, with representatives from related ministries and the government of the People's Republic of China," said Lim.

He specified the negotiations were held to discuss terms, compensation, project cancellation conditions, as well as borrowings based on payments made grounded in completed work costs.

He said all offers must be based on due diligence to ascertain the true cost incurred and committed, with compensation and payments based on work that has been done.

"The Attorney General's Chambers will advise the government on how best to reclaim the overpayment," Lim said.

He added that 13% of the project's works have been completed, despite the government having paid 88% of the project's cost.

In a supplementary question, Chan asked if the government's seizure of approximately RM1 billion from CPP's bank account would impact ties with China.

Lim replied that the actions were not "country specific" but rather "company specific", with the move not being against the Chinese government but rather against CPP.

Reuters had reported, citing Singapore publication The Straits Times, that MoF had seized RM1 billion from CPP's bank account.

The TSGP project was cancelled last year, with the RM3.54 billion having been paid out by the government.

In May last year, Lim had announced that the TSGP and the Multi-Product Pipeline projects had been cancelled. Both contracts had CPP as the lead contractor, and alongside associate contracts were worth RM10.4 billion in total.

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