States cannot expect federal to automatically bear additional cost from their decisions

Prime Minister, Datuk Seri Anwar Ibrahim said requests for additional federal allocations or loans must be renegotiated whenever project costs increase.

He said, the federal government cannot be expected to automatically bear additional costs or loans made by the state governments

That is why, according to Anwar, maintaining good relations between the federal and state governments is crucial to resolving such matters.

“The federal government cannot be trapped by decisions made at the state level and be expected to automatically provide additional allocations or loans when problems arise. 

“That is why I say relations between the federal and state governments must be good,” he said during Minister’s Question Time in the Dewan Rakyat.

Anwar was responding to Datuk Awang Hashim (PN-Pendang), who raised the issue of the Pelubang Water Treatment Plant upgrading project in Kedah.

Awang said the project was being financed through a federal government loan to the Kedah government, to be repaid by the state’s water supply operator with a three per cent interest rate.

He added that the project now requires approval for a Notice of Change (NOC) involving an additional RM113 million.

He asked whether the government was prepared to expedite approval of the NOC and the disbursement of the additional loan to prevent project delays.

He said the loan disbursement process had taken nearly five months, forcing the Kedah government to advance more than RM40 million to ensure construction was not disrupted.

Anwar said the Energy Transition and Water Transformation Ministry would provide a detailed explanation, adding that any NOC involving additional funding requires fresh negotiations.

“The first issue concerns the role of the contractor. In this case, there are also problems involving the contractor. Secondly, when there are additional costs, they involve the federal government,” he said.