KUALA LUMPUR: Putrajaya will recover about RM5 billion following the cancellation of two pipeline projects in Sabah, the Dewan Rakyat was told today.
Prime Minister Datuk Seri Anwar Ibrahim said the sum was part of an RM8 billion loan initially taken for the Trans Sabah Gas Pipeline and Multi-Product Pipeline projects.
He said the funds would now be redirected to water supply schemes in Perak and Penang under an Oct 30 agreement between Suria Strategic Energy Resources Sdn Bhd (SSER) and China Exim Bank. SSER is a wholly-owned unit of the Finance Ministry.
“The loan redirection agreement reduces the national loss to RM3 billion, including the RM1.5 billion already spent,” he said in reply to Datuk Jonathan Yasin (GRS-Ranau) during Minister’s Question Time.
Jonathan had asked how the government planned to recoup funds disbursed for the ventures after only 13 per cent of the work was completed.
“So we recover around RM5 billion through the Perak and Penang water supply project,” Anwar said.
Anwar said the two contracts, valued at RM9.4 billion, were awarded without tender through direct negotiation between the government and China Petroleum Pipeline Bureau on Nov 1, 2016.
He said legal and guarantee obligations had to be honoured irrespective of the status of the projects, requiring Malaysia to service the RM8 billion China Exim Bank loan.
“I hope it is acknowledged that previous prime ministers tried (to resolve the issue),” he said, noting efforts by Tun Dr Mahathir Mohamad, Tan Sri Muhyiddin Yassin and Datuk Seri Ismail Sabri Yaakob.
Anwar said he raised the matter with Beijing in 2024, receiving acknowledgement from Chinese President Xi Jinping and Premier Li Qiang.
With China unwilling to continue the ventures in Sabah for now, Anwar said the federal government decided to sustain support for the state through other initiatives.
On the water scheme, Anwar said the RM5 billion would fund raw water transfers from the Perak River to the Bukit Merah Dam, upgrading works along the Kurau River and the main canal, and water treatment plants in Kerian and Boga.
The project targets a daily capacity of 700 million litres for Perak, including the Kerian industrial belt, 300 million litres for Penang, and 500 million litres of raw water for agricultural irrigation.
He said contracts would be awarded via open tender, with Malaysian contractors stipulated.
“China agreed to this,” he said.
Anwar also outlined several energy initiatives the government is pursuing in Sabah, including the RM644 million Lahad Datu Battery Energy Storage System, underway since June 2025, and the RM765 million Southern Link transmission line.
He also cited the RM4 billion Ulu Padas hydroelectric project, which has a planned generating capacity of 187.5 megawatts and is targeted for commissioning in 2030.