Report: China requests ‘friendly consultation’ with Malaysia over RM1b seizure from its gas pipeline projects

Ben Tan
On Monday, the prime minister said the Malaysian government is entitled to seize the RM1 billion held by CPP, as the oil and gas pipeline projects, worth US$2.3 billion, had been cancelled. — Picture by Ahmad Zamzahuri

PETALING JAYA, July 17 — Beijing believes its two multi billion-dollar gas pipeline projects in Malaysia being built by a state-owned Chinese company can be resolved through “friendly consultation”.

China’s foreign ministry spokesman Geng Shuang said the project — being built by a subsidiary of state energy giant China National Petroleum Corporation — was “carried out in accordance with the contract”, international newswire Associated Press reported today.

“For problems arising in cooperation, the two sides should properly resolve them through friendly consultation,” he was quoted as saying.

Geng stressed that the two countries enjoy a “long-term friendly cooperative relationship” and that China and Malaysia will be able to deepen their economic and trade ties.

His comment was in response to the Malaysian government’s seizure of RM1 billion (US$240) million from the state-linked Chinese firm appointed to build two now-stalled pipelines worth more than US$2.3 billion.

A separate report from Singapore paper The Straits Times cited sources as saying Malaysia had earlier this month ordered banking giant HSBC to transfer the funds in China Petroleum Pipeline Engineering Co Ltd’s (CPP) Malaysian account to a company owned by the Ministry of Finance, Suria Strategic Energy Resources Sdn Bhd (SSER).

On Monday, Prime Minister Tun Dr Mahathir Mohamad said the Malaysian government is entitled to seize the RM1 billion held by CPP, as the oil and gas pipeline projects, worth US$2.3 billion, had been cancelled.

He said Malaysia was entitled to reclaim the money as over 80 per cent of the cost had been paid out but only 13 per cent of work was completed.

Dr Mahathir said the seized fund is money yet to be spent for the controversial pipeline project, which was scrapped after Pakatan Harapan took power in last year’s general election.

In May, Putrajaya said it was negotiating with China-based contractors on the total compensation amount to be paid by SSER, following the cancellation of the RM9.4 billion pipeline.

SSER was incorporated as a wholly-owned unit of the Finance Ministry in 2016 to undertake two projects: Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP).

Both contracts were awarded to China Petroleum Pipeline Bureau in November 2016 in contracts signed by former Treasury secretary-general Tan Sri Irwan Serigar, who is also SSER chairman.

The MPP is a RM5.35 billion project to build a 600km oil pipeline from Jitra to Port Dickson while the TSGP is a 662km gas line connecting the Kimanis Gas Terminal to Sandakan and Tawau at a cost of RM4.06 billion.

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