KUALA LUMPUR (Nov 3): Prime Minister Datuk Seri Anwar Ibrahim said on Tuesday that investigations into two failed gas pipeline projects involving a participation loan from the Export-Import Bank of China (China Exim Bank) remain open despite difficulties obtaining information involving both countries. 

The prime minister said that reports he has received so far indicate elements of misappropriation in both the cancelled Trans-Sabah Gas Pipeline (TSGP) and Multi-Product Pipeline (MPP) projects. 

Although the government agreed to redirect RM5 billion in related loans from those projects towards water infrastructure in Perak and Penang, the investigations remain ongoing.

“The case has not been closed,” Anwar told the Dewan Rakyat during the prime minister’s questions session. “When investigations involve two countries, there is also information that we have not been able to obtain so far. Hopefully, we can continue.”

According to Anwar, the Malaysian Anti-Corruption Commission had encountered difficulties in its investigations, but stressed that he did not regard the matter lightly. 

Anwar, who is also the finance minister, also criticised the original contracts for requiring payments according to a fixed timetable rather than construction progress.

The two contracts, worth a combined RM9.4 billion, were awarded through direct negotiations with the China Petroleum Pipeline Bureau in November 2016. By 2018, RM8.3 billion, or 88% of the value, had been paid despite reported construction progress of only about 13%.

“If payment was due in December, it was paid even if the project had not progressed. I do not understand the method, but that was how payments were approved,” Anwar said.

The RM4.06 billion TSGP was intended to connect Kimanis with Sandakan and Tawau in Sabah, while the RM5.35 billion MPP would have linked Melaka and Port Dickson with Jitra, Kedah. Both were managed by Minister of Finance Inc-owned Suria Strategic Energy Resources Sdn Bhd (SSER).

The TSGP was mooted in 2016 by the Barisan Nasional (BN) government. It was supposed to supply gas from the west coast to power up a proposed gas power plant on the east coast. In 2018, the project was scrapped by the Pakatan Harapan (PH) administration amid reports of a lofty upfront payment despite little construction progress. 

The project, later said to be one of several awarded to Chinese companies in return for bailing out 1Malaysia Development Bhd (1MDB), was revived by the Perikatan Nasional administration in 2021. 

It was scrapped again by the current PH-BN government, according to a Feb 19, 2025 parliamentary written reply from the Ministry of Economy.

On Oct 30, SSER signed an agreement with China Exim Bank to redirect RM5 billion in loans towards the Northern Perak Water Supply Scheme. 

Malaysia had remained liable for RM8 billion in related loans following the pipeline projects’ termination in 2018, according to the Finance Ministry.

Anwar said China had accepted Malaysia’s condition that construction work for the water scheme be awarded through open tender to local contractors. 

The scheme involves transferring raw water from Sungai Perak to the Bukit Merah Dam, upgrading waterways and building treatment plants in Kamunting and Bogak.

It targets supplies of 700 million litres a day for northern Perak and 300 million litres a day for Penang, alongside 500 million litres a day of raw water for agricultural irrigation. Anwar said only treated water would be supplied to Penang. 

Addressing concerns about funding originally intended for Sabah being redirected, he said the federal government would support the state’s electricity needs through other projects. 

These include the RM644 million Lahad Datu battery energy storage system and RM765 million in financing for the Southern Link electricity transmission project.

He also cited the RM4 billion Ulu Padas hydroelectric project, which is developer-financed under an independent power producer arrangement involving Sabah Energy Corporation and is targeted to begin operations in 2030.

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