KUALA LUMPUR: The government has repurposed RM5 billion of loans from China to finance a major water supply project in Perak, turning part of the financial liability from two abandoned pipeline projects into funding for essential infrastructure.
The RM5 billion, originally linked to the Trans-Sabah gas pipeline (TSGP) and multi-product pipeline (MPP) projects which were terminated in 2018, was redirected towards the northern Perak water supply scheme (NPWSS).
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim witnessed the signing of an agreement between Suria Strategic Energy Resources Sdn Bhd, a Finance Ministry-owned company, and the Export-Import Bank of China (Cexim) on Thursday.
The Finance Ministry said the move converts part of the financial liability arising from two abandoned pipeline projects into funding for essential water infrastructure.
Following the cancellation of the TSGP and MPP projects, Malaysia remained liable for RM8 billion in loans from Cexim despite the pipelines never being completed.
The government said the agreement marked a partial recovery of the financial losses arising from the abandoned projects, following negotiations with the Chinese bank.
The ministry said the previous three administrations had been unable to resolve the outstanding loan issue despite efforts to do so.
The agreement marks a significant achievement for the Madani government in concluding negotiations and achieving a partial recovery on the loan by repurposing RM5 billion to implement NPWSS, it added.
“Thus, reducing the losses arising from the TSGP and MPP projects and ensuring that RM5 billion can be utilised to develop essential infrastructure that benefits the rakyat, particularly in the states of Perak and Penang,” it said.
The NPWSS will involve transferring raw water from Sungai Perak to Bukit Merah Dam, upgrading infrastructure along Sungai Kurau and Terusan Besar, and building water treatment plants in Kamunting and Bogak.
Once completed, the scheme is targeted to supply up to 700 million litres of treated water daily to northern Perak, including the Kerian industrial area, and 300 million litres daily to Penang.
It will also provide 500 million litres of raw water daily for agricultural irrigation.
The project is expected to strengthen water security, meet rising demand from households, industries and farms, and support economic development in northern Perak and Penang.
“Water security is among the government’s priorities to ensure the well-being of the people and strengthen economic development, especially in the northern Perak region.
“The implementation of NPWSS is expected to strengthen long-term water security, meet the increasing demand for domestic, agricultural, and industrial uses and support socioeconomic development,” the ministry said.
Construction works will be undertaken by local contractors, providing opportunities for domestic companies to participate in the infrastructure project.
The signing was also witnessed by Deputy Prime Minister and Energy Transition and Water Transformation Minister Datuk Seri Fadillah Yusof, Home Minister Datuk Seri Saifuddin Nasution Ismail, Cexim chairman Chen Huaiyu and representatives of the Chinese embassy and China National Petroleum Corporation.
The agreement was signed by SSER board member Mohd Fariszan Ahmad and Cexim vice-president Kang Wang.