MOF Inc unit seals RM5 billion loan reallocation for Northern Perak water supply scheme

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Perak water scheme loan restructuring

Highlights

Suria Strategic Energy Resources Sdn Bhd and Export-Import Bank of China signed a RM5 billion loan reallocation agreement to finance the Northern Perak Water Supply Scheme.
The Ministry of Finance said the reallocation of the RM5 billion loan will reduce losses from the Trans-Sabah Gas Pipeline and Multi-Product Pipeline projects.
NPWSS will provide a water supply of 700 million litres per day to northern Perak, 300 million litres to Penang, and 500 million litres for agricultural irrigation.

This article was translated from the original. Read the original version by our correspondent here.

Agreement details and project scope

As reported by The Edge Malaysia, Suria Strategic Energy Resources Sdn Bhd, a Minister of Finance Inc company, and Export-Import Bank of China signed a RM5 billion loan reallocation agreement on Friday to finance the Northern Perak Water Supply Scheme, or NPWSS.

The Ministry of Finance said in a statement that the signing marked a major government milestone in finalising negotiations and recovering part of the loan by reallocating RM5 billion to implement the project. The ministry said the move also reduces losses arising from the Trans-Sabah Gas Pipeline and Multi-Product Pipeline projects.

The agreement was signed by Suria Strategic Energy Resources board member Mohd Fariszan Ahmad and Export-Import Bank of China vice president Kang Wang. NPWSS is an integrated water supply infrastructure project involving the transfer of raw water from the Perak River to Bukit Merah Dam, upgrading works along the Kurau River and the Main Canal, and the construction of water treatment plants in Kamunting and Bogak.

Impact on water security and regional development

The Ministry of Finance said the project aims to deliver a water supply capacity of 700 million litres per day to northern Perak, including the Kerian industrial area, 300 million litres per day to Penang, and 500 million litres per day of raw water for agricultural irrigation. Construction work will be carried out by local contractors.

The ministry said the implementation of NPWSS is expected to strengthen long-term water security, meet growing demand for domestic, agricultural and industrial use, and support socioeconomic development. Redirecting the funds to this essential utilities project also refocuses financing on public assets that provide more direct benefits to the people, particularly in Perak and Penang.

In our earlier coverage of the 2027 Budget debate , we highlighted concerns about the use of GLCs/GLICs and government-linked entities to fund non-commercial projects, including risks to cash flow and the core mandates of institutions that safeguard the interests of contributors and depositors. We also cited calls for requirements covering written directives, full cost calculations, annual disclosures and clarity on government repayment guarantees to limit risk and improve transparency around commitments.

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