Expensive Pipeline

Some report said RM25billion, while this report said RM50 billion as the cost of 300+km pipeline project.
I am saying flatly that its not worthwhile and will do more damage to the country, people lives and environment than the profit that this project is supposed to generate.

Lets assume that the total cost is RM25billion, everything goes smoothly and no cost overrun. Lets assume that the money is funded by our EPF contributions. (So do you expect government to print money for this? That is worse. Or borrow money from Barclays Bank UK, and charged 7% interest?)
Assuming that EPF require return on investment of 5% (make the calculation easy), we would expect a net profit of RM1.25billion annually.
Wow thats high hurdle rate!
Add operational cost, damage to the environment, environmental risks associated with oil pipeline.
Did I mention viability yet?
Why would oil tanker want to stop and unload in Kedah when they can go around Sumatera and enter South China Sea through Sunda Strait as they always done?
Who benefit from this project? The rakyat?
Absolutely not, the Chinese, Taiwanese, Korean and Japanese, if they use this facility.

Let me propose another form of investments that will benefit the country and the rakyat:
1. Lend RM100,000 to every poor Malaysian, so that they can use the money to improve their lives like starting businesses, build better housing, get themselves educated etc or simply invest in trust funds like ASW.
2. Invest in electric energy production, so that we can have cheaper electricity. This could be in the form if wind turbine on the hills and/or solar panel in every homes.
3. Water supply.
4. Waste water treatment.

Fiscal expansion measure like this, pipeline project would siphon funds from other investment. If the investment will directly benefit future production in food and other good, that will bring benefit in lower product prices in the future.
Unfortunately this pipeline project does not benefit rakyat directly, but benefit foreigner. So money for other investments will be starved to finance this pipeline, higher interest rate, reducing investments, shrinking future production which result in higher inflation and prices.

Let scrap this project, instead, lets do fiscal expansion that will benefit future production in the country, which will result in cheaper prices (read competitive) of goods and services.

Did I mention about the rainforest, nature reserve yet?



Proposed oil pipeline across northern Malaysia approved, says prime minister

The Associated Press
Monday, May 7, 2007
KUALA LUMPUR, Malaysia: The Malaysian government has approved building an oil pipeline across the breadth of the country, a project that could help tankers avoid sailing through the busy Malacca Strait, Prime Minister Abdullah Ahmad Badawi said Monday.

The proposed 50 billion ringgit (US$14.2 billion; €10.4 billion) project involves building a 320-kilometer (200-mile) pipeline from Kedah state on the northwestern coast to Kelantan state in the northeast, officials have said.

"Yes, we have agreed to it," Abdullah, who is also finance minister, told reporters.

The project will help accelerate economic development in the north and east of peninsular Malaysia, he said, adding that other details would be announced later.

The plans call for at least one coastal refinery that could process 200,000 barrels daily scheduled to be operational by the end of 2010, Kedah officials said last month.

Crude oil would be refined in Kedah, pumped through the pipe to Kelantan and then loaded onto tankers bound for Japan, China and South Korea, completely bypassing Singapore and the Malacca Strait.

Investors from China, Iran and Saudi Arabia are expected to take a stake in the project, which will allow Middle East oil shipments to reach the South China Sea without traveling through the Malacca Strait, which lies off peninsular Malaysia's west coast, officials have said.

The strait, which carries half the world's oil and more than a third of its commerce, is shared by Malaysia, Indonesia and Singapore. It is notorious for robberies and kidnappings by pirates, but attacks have fallen following increased security patrols in 2005.

Malaysian firms Merapoh Resources Corp. and SKS Ventures will build the refineries, while Trans-Peninsula Petroleum will construct the pipeline, according to Kedah officials.

SKS Ventures already has links with the Middle East oil industry. The company recently signed a US$16 billion (€12 billion) deal with Iran to develop two gas fields in southern Iran.