Kuala Lumpur:The government has successfully minimized its financial losses from the cancellation of the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects, reducing the deficit to RM3 billion by reallocating RM5 billion in loans towards water supply projects in northern Perak and Penang.

According to BERNAMA News Agency, Prime Minister Datuk Seri Anwar Ibrahim announced that an agreement was signed on October 30 between Suria Strategic Energy Resources Sdn Bhd (SSER) and the Export-Import Bank of China (CEXIM) to reallocate the funds. The reallocated RM5 billion will finance the Northern Perak Water Supply Scheme.

The reallocation agreement is the result of negotiations initiated by Malaysia in 2024, along with discussions held with Chinese President Xi Jinping and Premier Li Qiang in 2025, as stated by Anwar during the Minister's Question Time in the Dewan Rakyat. Anwar also highlighted that he had witnessed the signing of the agreement between SSER and CEXIM last Friday, which aims to curtail the financial impact following the termination of the TSGP and MPP projects in 2018.

Further details revealed by Anwar indicate that RM8.3 billion, representing 88 percent of the RM9.4 billion combined contract value, had been disbursed by 2018, although the physical progress of the projects was only at 13 percent. However, the reported progress figures have yet to be audited or verified. Reviews have disclosed unresolved issues related to land matters and the feasibility of gas supply for the TSGP, as well as pipeline installation rights for the MPP, which Anwar described as a "very serious governance failure."

The MPP was a 600-kilometer petroleum pipeline project connecting Melaka and Port Dickson in Negeri Sembilan to Jitra, Kedah, with a contract value of RM5.35 billion. The TSGP was a 680-kilometer gas pipeline project linking the Kimanis Gas Terminal to Sandakan and Tawau in Sabah, valued at RM4.06 billion. Both projects were primarily financed by CEXIM, which provided loans covering 85 percent of their total value, with the Federal Government serving as guarantor.

Regarding the implications for Sabah, Anwar mentioned that the government plans to allocate nearly RM5 billion towards electricity supply and pipeline projects in the state to address the local needs.