July 23, 2008

`500km Gas Pipeline Project on Track’

By Zuraimi Abdullah

THE 500km gas pipeline project linking Sabah and Sarawak and 300- megawatt gas-driven power plant in Sabah are on, the chief of national oil corporation Petroliam Nasional Bhd (Petronas) says.

"At the moment, it (gas pipeline project) is on schedule," Petronas president and chief executive officer Tan Sri Mohd Hassan Marican told reporters after Petronas Gas Bhd's (PetGas) annual general meeting in Kuala Lumpur yesterday.

A Sabah Barisan Nasional component party had asked the state government to insist that Petronas call off the project to channel gas from Kimanis to Bintulu in Sarawak.

United Pasokmomogun Kadazandusun Murut Organisation president Tan Sri Bernard Dompok said it should be stopped to encourage downstream processing of gas pumped from offshore fields along Sabah's west coast.

Prime Minister Datuk Seri Abdullah Ahmad Badawi had reportedly told Sabah BN component party leaders at a meeting on May 31 that the project would be stopped.

On June 11, however, Petronas vice-president of gas business Wan Zulkiflee Wan Ariffin was quoted as saying that the estimated RM390 million project would proceed and that it was due for completion by March 2011.

Hassan said Petronas would operate the pipeline, while the project would be carried out by production-sharing contractors.

The gas would be channelled to Petronas' liquefied natural gas complex in Bintulu.

Hassan also said that the power plant in Kimanis would be jointly built with Yayasan Sabah.

"It is very much in line with the gas pipeline project," he said, adding that the plant's development cost could not be determined as yet.

On another note, Hassan (pic) said he did not foresee the gas price hike as having any major impact on PetGas since it is both a supplier and a user.

He said PetGas would talk to its customers to defray some of the impact of costlier gas.

PetGas expects things to be a bit more challenging financially as, according to Hassan, its effective tax rate is now on par with everybody's.

The company enjoyed tax incentives in recent years, but its tax expense increased ninefold to RM301.2 million in the financial year ended March 31 2008 from RM34.2 million the year before.

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