Finance Minister Lim Guan Eng had revealed today that a company with links to controversial businessman Low Taek Jho was paid RM8.3 billion or 88% of the contract’s worth, despite completing only 13% of the work to build two pipelines in Kedah and Sabah.
He said the government had discovered that the payment schedule for these contracts were based on timelines, and not on progressive work completion.
The project, worth RM9.4 billion, was given to Suria Strategic Energy Sdn Bhd (SSER), a wholly-owned finance ministry subsidiary set up in 2016 specifically to undertake the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP).
That payment did not include two other consultancy agreements worth RM525 million, and a maintenance agreement worth RM476 million, awarded to companies from China.
The projects, said Lim, were awarded to China Petroleum Pipeline Bureau (CPPB) in November 2016, and signed by Irwan Serigar, who was chairman of SSER.
Najib noted that Lim had stated that all payments were made as per the agreement with China Petroleum Pipeline Bureau.
He said this was a fully-owned subsidiary of one of the largest companies in the world — the China state-owned China National Petroleum Corporation — and not to any other parties.
“These two pipeline projects, which will bring much economic and energy security benefits to Malaysia, were negotiated on a government-to-government basis with the People’s Republic of China,” Najib stated in a posting on his Facebook account.
“China’s Premier Li Keqiang and I had witnessed the signing of the memorandum of understanding (MoU) for the pipeline projects, along with other projects, while in Beijing on May 14, 2017.
“At the same event, China had also committed to importing goods worth US$2 trillion over the next five years from Malaysia, invest up to US$150 billion in Malaysia and offer 10,000 places for training and studies in various institutes in China.”
Najib said China had then assisted Malaysian oil palm smallholders and contributed to their income and welfare through the purchase of more oil palm from Malaysia.
“While I welcome open and transparent investigations into these two projects, I believe that great care be taken when making such serious politically-motivated public allegations involving foreign state-owned companies.
“This may have a negative effect on foreign relations and international trade,” Najib added.
Lim had said that MPP involved a 600km petroleum pipeline connecting Melaka and Port Dickson to Jitra, Kedah, costing about RM5.35 billion.
TSGP, costing about RM4 billion, was planned as a pipeline to connect Kimanis Gas Terminal with Sandakan and Tawau, spanning 662km.
Lim said the Cabinet approved the projects on July 27, 2016, with the contracts signed around the same time as the contracts for the East Coast Rail Link (ECRL) project.
He, however, said the contracts were negotiated by the Prime Minister’s Department, without involving Treasury officials.
“If necessary, we would seek the assistance of the Chinese government to help trace the flow of funds in China, in order to investigate the possibility of money laundering.”
Lim said during a briefing to Treasury officials on May 28, SSER reported that the three-year project started on April 2017.
“But as at the end of March 2018, or exactly a year later, the MPP and TSGP projects had achieved only 14.5% and 11.4% progress completion respectively,” he said.
RM8.3 bil paid to firm with Jho Low link, but only 13% job done