Malaysia ready to talk to China on pipeline project payment, says Dr M

According to the PM, he is not concerned that a fallout with China would arise following the seizure of funds from CPP


MALAYSIA is ready to hold discussions with China, as requested by the latter over the recent seizure of more than RM1 billion from a Chinese state-owned bank with respect to unfinished pipeline projects, said Prime Minister (PM) Tun Dr Mahathir Mohamad (picture).

“We are ready to talk to China,” Dr Mahathir said, when asked to comment on recent reports that China is seeking a “friendly consultation” with Malaysia over the issue.

He was speaking to reporters after launching the Beyond Paradigm Summit 2019 in Kuala Lumpur yesterday.

It was reported recently that the government had ordered HSBC Bank Malaysia Bhd to transfer over RM1 billion from a bank account of China Petroleum Pipeline Engineering Ltd (CPP), a subsidiary of state energy firm China National Petroleum Corp, to Suria Strategic Energy Resources Sdn Bhd (SSER), a wholly owned unit under the Finance Ministry.

The funds seizure came almost a year after the government suspended the two projects valued at US$2.3 billion (RM9.47 billion), in which CPP was the lead contractor.

In 2016, CPP was awarded a contract from the previous Barisan Nasional administration to build a 600km petroleum pipeline along the west coast of Peninsular Malaysia and a 662km gas pipeline in Sabah.

On Monday, Dr Mahathir confirmed that the government had reclaimed some of the funds paid to CPP to build two petroleum pipelines in Malaysia.

He said Putrajaya is entitled to reclaim the money as 80% of the total project cost had been paid, yet CPP had only completed 13% of the work.

According to the PM, he is not concerned that a fallout with China would arise following the seizure of funds from CPP.

A day later, China’s Foreign Ministry spokesman Geng Shuang said the project was “carried out in accordance

with the contract”, and that “for problems arising in cooperation, the two sides should properly resolve them through friendly consultation”.

Meanwhile, Finance Minister Lim Guan Eng told the Dewan Rakyat that negotiations between SSER, CPP and its financier Export-Import Bank of China are still ongoing despite the seizure.

Lim described the action to seize RM1 billion from CPP’s bank account as “company-specific” and not against any country.

He said this in response to Chan Foong Hin (Pakatan Harapan-Kota Kinabalu), who inquired on the progress of government efforts to reclaim monies paid out for the project.

Lim said only 13% of the project’s works have been completed, although 88% of the project’s cost had been paid.

“At the same time, ongoing negotiations are being held by the government — with the Attorney General’s Chambers taking the lead — with representatives from related ministries and the government of China,” he said in reply to a supplementary question by Chan, who asked if the recent move would impact ties with Beijing.