THE Finance Ministry has suspended the East Coast Rail Link (ECRL), Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) due to laggard completion by contractors.

Finance Minister Lim Guan Eng said the move, made on Prime Minister Dr Mahathir Mohamad’s instruction, was not targeted at China.

The three projects were being built by Chinese state-owned companies.

Lim said Dr Mahathir, after seeking advice from Attorney-General Tommy Thomas, had instructed the Finance Ministry to issue a “suspension notice” for all contracts related to the projects on Tuesday. 

“The services and operation ‘suspension notice’ takes effect immediately until further notice is issued by the Finance Ministry.

“The decisions are solely directed towards the related contractors relating to the provisions mentioned in the agreements, and not at any particular country,” Lim said in a statement today.

Malaysia Rail Link Sdn Bhd undertook the ECRL while Suria Strategic Energy Resources Sdn Bhd undertook the pipeline projects. Both companies are wholly-owned subsidiaries of MoF.

The MPP and TSGP, with a total construction cost of RM9.4 billion, were awarded to China Petroleum Pipeline Bureau on November 1, 2016.

SSER has paid RM8.3 billion or 88% of the project’s construction value even though the unaudited progressive work completion was only at 13%.

“These SSER contracts worth RM9.4 billion have not taken into account cost related to land acquisition, two expert consultancy agreements, and a maintenance agreement comprising a total additional cost of RM1.7 billion,” Lim said.

The ECRL project is a rail line that stretches from Port Klang to Pengkalan Kubor, Kelantan. Both projects were approved by the Cabinet in 2016 and 2017, in which China Communications Construction Company was appointed as the main contractor. 

“The actual total cost for the ECRL project is expected to reach RM81 billion, which includes land acquisition cost and loan interest during the project construction.” – July 5, 2018.