Prime Minister Anwar Ibrahim deserves recognition for successfully negotiating a way out of the longstanding financial predicament involving the Trans-Sabah Gas Pipeline (TSGP) and Multi-Product Pipeline (MPP) projects.
The agreement reached with China Exim Bank on October 30, 2026 allows RM5 billion of the financing originally intended for the abandoned pipeline projects to be redirected towards the Northern Perak-Penang Water Supply Scheme.
It is not a refund of RM5 billion in cash. The financing obligation remains, but at least a substantial portion can now be utilised for something beneficial rather than continuing to burden the government without producing the intended infrastructure.
The original gas and petroleum pipeline projects will not be recommencing under this arrangement. Nevertheless, the agreement offers a practical solution to a longstanding water supply problem affecting northern Perak and Penang, with wider implications for agriculture, industrial development and the politics of interstate water resources involving Kedah.
The Prime Minister deserves credit for achieving what three preceding administrations had been unable to conclude. It is also a reflection of the value of maintaining good diplomatic relations with China, even when dealing with difficult contractual and financial issues.
According to the Prime Minister's explanation during the November 3 Prime Minister's Question Time, the estimated loss from the failed projects has been reduced from approximately RM8 billion to RM3 billion.
That is a meaningful achievement. However, the parliamentary exchange with Ranau MP Datuk Jonathan Yasin also brought back uncomfortable memories of a controversy that first surfaced almost a decade ago.
The Early Warnings I Chose Not to Pursue
The two projects, with a combined contract value of RM9.4 billion, were approved in 2016 during the BN administration.
It was a period when the country was already engulfed in the controversies surrounding 1MDB and SRC International. Between 2015 and 2018, allegations, revelations and political counter-allegations dominated public discourse.
Sometime between late 2016 and early 2017, I received information concerning the Sabah gas pipeline project. There were suggestions of Jho Low's involvement and concerns about substantial payments being made before corresponding construction progress. I did not pursue the matter. It was not because I had confidence in Jho Low. Quite the contrary.
Having spoken to people who had dealings with him, I had long been sceptical of Jho Low. My impression was that he was devious and not necessarily honest in his dealings with the government and its leadership. Nevertheless, the political environment at the time made it difficult to distinguish genuine financial irregularities from allegations intended to undermine the BN government.
The relentless coverage of 1MDB and SRC, including investigative reports by foreign media, had become inseparable from the political campaign against the government. I was sceptical of some of the reporting and the manner in which allegations were being politically amplified.
Tony Pua, then a prominent opposition MP pursuing the 1MDB controversy, was among the most vocal critics of the Najib administration. After the change of government in 2018, he publicly advanced suspicions that payments associated with the pipeline projects might have been connected to efforts to settle 1MDB-related obligations, including the wider debt controversy.
At the time, I was not convinced that the allegations had sufficiently established where the pipeline payments had actually gone. In retrospect, however, my scepticism towards the political narrative should not have displaced the need to examine the underlying commercial transactions.
The payment arrangements themselves deserved investigation, regardless of who raised the allegations or what political objectives they might have had.
The Payment Schedules Raise Serious Questions
The Ministry of Finance's payment schedules reveal that RM8.2525 billion had been disbursed for the two projects by 2018. Approximately RM4.48 billion was paid under design, procurement and supply contracts, while another RM3.77 billion was paid under construction and commissioning contracts. The reported physical progress of both projects was only around 13%.
Defenders of the projects have argued that substantial early payments were required to procure pipes, acquire materials and establish fabrication facilities.
There is commercial merit to the argument that major infrastructure projects incur considerable expenditure before physical construction is substantially completed. But that cannot be an all-encompassing explanation. The payment schedules show that substantial sums were also released under construction and commissioning contracts.
The questions remained:
- What work had been undertaken to justify those payments?
- Were the pipes manufactured, inspected and delivered?
- Who owned the materials?
- What assets remained when the contracts were terminated?
- Were there adequate performance guarantees and safeguards?
- Most importantly, why was the contractual payment schedule allowed to run so far ahead of verified construction progress?
The Prime Minister's parliamentary answer confirmed that payments were made according to predetermined timelines rather than actual work progress. Even more troubling, the reported 13% progress has apparently never been independently audited or verified.
Eight years after the contracts were terminated, surely the government should already have established the actual work completed, expenditure incurred and value of recoverable assets.
A leaked memorandum attributed to the Attorney General's Chambers has been cited in defence of certain financing arrangements, particularly advances associated with land acquisition. It raises questions about the legal authority for those specific advances, but it does not establish that the entire RM8.3 billion disbursement was commercially justified.
There is a difference between having the authority to approve a financing arrangement and ensuring that the arrangement adequately protects public funds.
Jho Low and the Unanswered 1MDB Connection
Subsequent court testimony has provided greater substance to concerns about Jho Low's involvement in discussions surrounding Chinese infrastructure projects. Najib's former special officer, Amhari Efendi Nazaruddin, testified in court about discussions involving Jho Low, Chinese parties and proposed arrangements to address 1MDB's financial difficulties.
That makes the connection worthy of serious investigation. However, establishing Jho Low's involvement in discussions is not the same as proving that the pipeline payments were diverted to settle 1MDB debts.
The latter requires proper financial tracing, documentary evidence and, where criminal wrongdoing is alleged, proof through the judicial process. If the original allegations were accurate, the public deserves to know. If some were exaggerated or unsupported, that should also be established.
The objective must be to determine what actually happened, rather than retrospectively vindicate one political narrative over another.
Why is the Investigation Still Unfinished?
The Prime Minister indicated that investigations have not been closed and that obtaining information involving parties in two countries has presented difficulties. That may explain some delays, but eight years is an extraordinarily long period for fundamental questions concerning billions of ringgit in public funds to remain unresolved.
The financial settlement with China Exim Bank is welcome. It should now provide an opportunity to bring the investigations towards a proper conclusion.
This should not become another political controversy revived merely for electoral convenience. With the Melaka state election approaching, one hopes the renewed attention is not intended to produce another round of politically convenient accusations of sakau, followed by the familiar cycle of sensational allegations, inconclusive investigations, and unrelated prosecution.
The country has heard enough political rhetoric about corruption. What is needed now is evidence, completed investigations and accountability.
The original projects were approved under a BN administration, and those who may have been involved could have had associations with UMNO. But the individuals concerned are not necessarily part of UMNO's present leadership. Political affiliation should neither confer immunity nor establish guilt.
Corruption, abuse of authority and commercial wrongdoing are ultimately the responsibility of the individuals involved, whether they are politicians, civil servants, corporate executives, intermediaries or contractors.
An entire political party should not be condemned for the conduct of particular individuals. Equally, political considerations should not prevent investigations into anyone who may have been responsible.
A Settlement Achieved, but Accountability Still Owed
The Prime Minister has achieved something worthwhile by converting a substantial portion of an inherited financial liability into financing for essential water infrastructure.
It is a pragmatic outcome that deserves acknowledgement. But financial recovery and accountability are two different responsibilities.
The RM5 billion arrangement may reduce the economic damage from the abandoned projects. It does not explain why the original contracts were structured as they were, how payments were approved or what ultimately happened to the funds.
Nor should the estimated remaining RM3 billion loss be accepted without a transparent accounting of the underlying expenditure, compensation and recoverable assets.
Perhaps the questions should have been pursued more vigorously when the controversy first surfaced. Certainly, they should have been answered long before now.
Eight years later, the questions are overdue, but no less relevant. The government should complete the investigations and disclose the findings to the extent permitted by law. Those responsible for any wrongdoing should be held accountable, irrespective of their former or present political associations.
The successful renegotiation with China Exim Bank demonstrates that a longstanding problem can still be resolved through patient negotiation and diplomacy. Hopefully, the same determination will now be applied to completing the investigation.
Let the RM5 billion settlement be remembered as a successful financial rescue, not as another occasion for political convenience. And let the remaining questions be answered by evidence, not election rhetoric.
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