DR Mahathir Mohamad said today the East Coast Rail Link and the two pipeline projects awarded to Chinese firms have been cancelled.

The prime minister said Chinese President Xi Jinping agreed with Malaysia’s stand that the projects had to be cancelled because of the government’s fiscal position.

Negotiations for compensation over the cancellation will be handled by government officials and the companies involved, Dr Mahathir said.

“China understands our problem and agreed,” Dr Mahathir was quoted as saying in news reports today.

The ECRL contractor is state-owned China Communications Construction Co Ltd.

The rail link, if built, would have connected Port Klang in Selangor and Pengkalan Kubor in Kelantan. It had been due to be constructed in two phases.

Various estimates have shown that the China-backed ECRL could be built for less than RM40 billion, but its cost had ballooned to between RM60 billion and RM70 billion. 

Meanwhile, the two pipeline projects worth RM9.4 billion had been contracted to China Petroleum Pipeline Bureau by the Finance Ministry-owned Suria Strategic Energy Resources Sdn Bhd (SSER).

SSER was set up on May 19, 2016 with the specific intent to undertake the MPP and TSGP projects. Both projects were approved by the cabinet on July 27, 2016.

It was reported that, as at end March this year — about 12 months after the three-year projects started — RM8.3 billion or 87.7% of the total contract value had been paid to China Petroleum Pipeline Bureau, although only 13% of the projects had been completed.

“If we have to pay, we have to pay. This is the stupidity of the previous government. There must be an exit clause that is fair for both parties. 

“Such stupidity has never been seen in the history of Malaysia. We must find a way to exit the project at the lowest cost possible.

“This is our stupidity. We cannot blame the Chinese for it,” said Dr Mahathir.

However, he said Malaysia may revive the ECRL once the country’s RM1 trillion debt has been reduced.

“The project will not go on because we don’t need it. When we need it, we’ll restart. At the moment, the priority is for reducing our debts.

“If we are not careful we can become bankrupt, this is the work of (former prime minister) Najib (Razak),” said Dr Mahathir. – August 21, 2018.

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