Does it come as a surprise? Just a delay or cancellation?
Reasons cited for reconsidering this US$7bil pipeline project, a project that transversed Kedah (PAS-controlled state), Perak (Opposition Alliance) and Kelantan (PAS), were the need to preserve the 2,000ha fertile soil in Yan, Kedah and its kampung suraus, cemeteries and mosques, and to relocate the proposed Petrochemical Industrial Zone project to Gurun, as it is closer to the Petronas fertilizer plant.
The project has a 40-year payback period according to one estimate.
It involves land acquisition in three different states, not just those cemeteries and suraus in Yan. So if those Yan folks aren't too happy, what about the rest in the proposed pipe-path?
It also involves turning forest reserves into pipe-path and therefore seeking EIA approval. More delay there.
The other issue is the matter of financing. In the absence of a major financial investor, TPP, a privately held company that is spearheading the project, may turn to the stock exchange to raise additional capital. In a report last May, Aseambankers, foresaw the project being financed with an 80-20 debt/equity ratio, implying a need to raise some $1.4 billion in share capital for the $7 billion project.
But the most important consideration is the project viability. After factoring in the unloading, transit and other handling costs that are part and parcel of this logistic short-cut, the margins may no longer be that attractive for potential financiers, and negotiating through the Straits of Malacca may not be that bad afterall for those oil-exporters.
Somehow, it seemed that the Malaysian PM have announced another mega project a little too prematurely without all the necessary survey and fact-finding. I don't think it is fair to implicate Opposition-run states wholly as reason for any stalemate. The people simply deserve to know more before allowing their kampungs to be demolished with the promise of rewards that come with the supposed industrialization.
Whatever the final answer might be, to continue with the pipe project or not, I just cannot foresee the mosaic State and Federal governments reaching a consensus anytime soon.
(Meanwhile, we can clearly hear Singapore sighing a relief, rubbing their hands together and just getting on with their port expansion...)
Reasons cited for reconsidering this US$7bil pipeline project, a project that transversed Kedah (PAS-controlled state), Perak (Opposition Alliance) and Kelantan (PAS), were the need to preserve the 2,000ha fertile soil in Yan, Kedah and its kampung suraus, cemeteries and mosques, and to relocate the proposed Petrochemical Industrial Zone project to Gurun, as it is closer to the Petronas fertilizer plant.
A better argument for rethinking the whole project is the wider socio-economic implications (and complications).
Let's examine: The project has a 40-year payback period according to one estimate.
It involves land acquisition in three different states, not just those cemeteries and suraus in Yan. So if those Yan folks aren't too happy, what about the rest in the proposed pipe-path?
It also involves turning forest reserves into pipe-path and therefore seeking EIA approval. More delay there.
The other issue is the matter of financing. In the absence of a major financial investor, TPP, a privately held company that is spearheading the project, may turn to the stock exchange to raise additional capital. In a report last May, Aseambankers, foresaw the project being financed with an 80-20 debt/equity ratio, implying a need to raise some $1.4 billion in share capital for the $7 billion project.
But the most important consideration is the project viability. After factoring in the unloading, transit and other handling costs that are part and parcel of this logistic short-cut, the margins may no longer be that attractive for potential financiers, and negotiating through the Straits of Malacca may not be that bad afterall for those oil-exporters.
Somehow, it seemed that the Malaysian PM have announced another mega project a little too prematurely without all the necessary survey and fact-finding. I don't think it is fair to implicate Opposition-run states wholly as reason for any stalemate. The people simply deserve to know more before allowing their kampungs to be demolished with the promise of rewards that come with the supposed industrialization.
Whatever the final answer might be, to continue with the pipe project or not, I just cannot foresee the mosaic State and Federal governments reaching a consensus anytime soon.
(Meanwhile, we can clearly hear Singapore sighing a relief, rubbing their hands together and just getting on with their port expansion...)
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