We understand, China firm says after Putrajaya scraps pipeline projects

PETALING JAYA: The contractor of several China-backed pipeline projects in Malaysia today acknowledged the government’s decision to scrap the ventures, adding that it would continue to discuss fair and equitable compensation with Putrajaya.

Referring to the move to cancel the Multi-Product Pipeline (MPP) project, the Trans-Sabah Gas Pipeline (TSGP) project and another pipeline project linking Melaka to a Petronas refinery and petrochemical plant in Johor, China Petroleum Pipeline Engineering Co Ltd (CPP) said it understood and respected that the decision was based on economic and financial reasons.

“As a result of the cancellation, CPP will re-assign staff, local and foreign, previously designated to the pipeline projects to other ongoing CPP projects in Malaysia and in other parts of the world.

“CPP hopes to work with the Malaysian government in the future pipeline project and contribute towards the economic prosperity of Malaysia,” it said in a statement.

The MPP and TSGP projects, amounting to RM9.41 billion, were awarded to China Petroleum Pipeline Bureau (CPPB) on Nov 1, 2016.

CPP was established in 2017 after a restructuring exercise of CPPB.

It came under scrutiny following claims that funds from its two pipeline projects in Malaysia were used to pay debts linked to 1MDB.

The company however denied this, saying all funds from the Export-Import Bank of China were paid directly to CPP’s bank accounts.

The matter arose after Finance Minister Lim Guan Eng revealed that 88% of the contract cost, or RM8.3 billion, had been paid out by a finance ministry subsidiary despite only 13% of the work being completed.

The two projects were suspended soon after, along with the multi-billion ringgit East Coast Rail Link project.