CCCC recovers after ECRL project shelved

By ALIFAH ZAINUDDIN / Pic BY TMR

China Communications Construction Co Ltd’s (CCCC) share price gained some 16 cents or 2% yesterday to close at HK$7.84 (RM3.87), retracing from a month low after Prime Minister (PM) Tun Dr Mahathir Mohamad said the RM81 billion East Coast Rail Link (ECRL) project was stopped.

CCCC’s share price dropped to a one-month low of HK$7.68 (RM3.79) last Friday.

Shares of the Chinese state-owned company listed on the Hong Kong Stock Exchange has been on the decline over the past week, losing more than 4% or 34 cents, since the PM scrapped the infrastructure deal in Beijing on Aug 21.

In the past month, CCCC has shed 69 cents or 8.24%, given the uncertainty surrounding the proposed 688km railway line.

Dr Mahathir, 93, announced the scrapping of the ECRL and two gas pipeline projects at the end of his five-day visit to China.

Dr Mahathir said the Chinese contractors involved in the rail link would be compensated and the projects could be restarted later when the country could afford it, but at a lower cost.

He said China’s leaders understood Malaysia’s plight and they had agreed to the country’s decision.

“It is all about borrowing too much money. We cannot afford it, we cannot repay and we do not need them. The Chinese see our point of view and none of the three leaders said ‘No’,” Dr Mahathir said in a joint press conference with Chinese Premier Li Keqiang last week.

CCCC, in a filing to the Hong Kong bourse in July, confirmed it received a letter from ECRL owner, Malaysia Rail Link Sdn Bhd, which required an immediate suspension of the contract under the ECRL project until further instructions.

The company said the suspension will not have a significant impact on its operating performance in 2018.

Since then, more than 1,800 of the 2,250 people hired for the ECRL project had been laid off.

Apart from the ECRL, Malaysia has also cancelled two pipeline projects worth RM9.4 billion which involved

the China Petroleum Pipeline Bureau — a subsidiary of the China National Petroleum Corp — another Chinese state- owned firm.

The projects — one running from Melaka and Negri Sembilan to Kedah, and a gas pipeline from Kimanis to Sandakan and Tawau in Sabah — are owned by Suria Strategic Energy Resources Sdn Bhd, a wholly owned subsidiary of the Ministry of Finance Inc.

Finance Minister Lim Guan Eng had earlier revealed that the two pipeline projects, with nearly 90% of the contracts being paid out, had a work completion rate of only 13%. The three-year projects began in April 2017.

Since Pakatan Harapan’s surprise election win in May, the new Dr Mahathir-led government has pledged to cut the national debt, eliminate corruption and review mega deals agreed by the previous Barisan Nasional administration.