Malaysia continues investigation into failed gas pipeline projects despite difficulties obtaining cross-border information

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Malaysia gas pipeline project investigation

Highlights

Malaysia continues its investigation into two gas pipeline projects worth a combined RM9.4 billion despite difficulties obtaining cross-border information.
An audit report revealed that RM8.3 billion, or 88% of the contract value, had been paid even though construction progress was around 13% in 2018.
On 30 Oct, SSER redirected RM5 billion of the loan to the Northern Perak Water Supply Scheme, but Malaysia remains liable for RM8 billion following the projects' termination.

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

Investigation details and loan restructuring

As reported by The Edge Malaysia, Anwar told the Dewan Rakyat that the investigations into the two projects remained open and had not been closed, despite the Malaysian Anti-Corruption Commission facing difficulties obtaining certain information. He said cases involving two countries posed additional challenges, but the government was not taking the matter lightly.

Anwar, who is also finance minister, said the reports he had received so far indicated elements of misconduct in both projects. He also criticised the original contracts, which stipulated payments according to a fixed schedule rather than construction progress, resulting in payments continuing even when work on the projects was not advancing accordingly.

The two contracts, worth a combined RM9.4 billion, were awarded through direct negotiations to China Petroleum Pipeline Bureau in November 2016. By 2018, RM8.3 billion, or 88% of the contract value, had been paid, even though reported construction progress was only around 13%.

The RM4.06 billion TSGP was planned to connect Kimanis with Sandakan and Tawau in Sabah, while the RM5.35 billion MPP was intended to connect Melaka and Port Dickson with Jitra, Kedah. Both were managed by Suria Strategic Energy Resources Sdn Bhd, a company owned by Minister of Finance Inc.

TSGP was first proposed in 2016 under the Barisan Nasional government to transport gas from the west coast to power a proposed gas-fired power plant on Sabah's east coast. The project was cancelled in 2018 by the Pakatan Harapan administration amid reports of large advance payments despite little construction progress. It was revived in 2021 under the Perikatan Nasional administration, then cancelled again by the current PH-BN government, as stated in the Ministry of Economy's written parliamentary reply dated 19 Feb 2025.

On 30 Oct, SSER signed an agreement with China Exim Bank to redirect RM5 billion of the loan to the Northern Perak Water Supply Scheme. According to the Ministry of Finance, Malaysia remains liable for RM8 billion in related loans following the termination of the pipeline projects in 2018.

In our earlier report on the impact of the 1MDB scandal on governance in corporations, we discussed how failures in checks and balances broadened the debate about board accountability and the role of political appointees in government-linked entities. We also highlighted stronger whistleblower protections and calls for internal auditors to be more proactive in detecting risks early, including through the use of data.

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