Penang may issue RM10bil bond for Bayan Lepas LRT project

GEORGE TOWN: The state government is looking at issuing a RM10bil bond to fund the Bayan Lepas light rail transit (LRT) project.

But Chief Minister Chow Kon Yeow said this was not an alternative to the Penang South Reclamation (PSR), which will go on as planned.“The idea to issue bonds was proposed by Prime Minister Tun Dr Mahathir Mohamad when he replied to our request for RM10bil in funding for the LRT project.

“A special purpose vehicle (SPV) will be set up and we are in talks with a consortium of banks for the issuance of the bonds, which would be guaranteed by the Federal Government.

“However, we would still prefer a grant from the government as a loan or bond would have to be re-paid and the state will still pursue getting funding for the LRT in the 12th Malaysia Plan.

“The PSR will go on as planned as the focus is on the south of the island, which is underdeveloped compared to the north and north-east parts, ” Chow said in reply to Jason Ong (PH-Kebun Bunga) at the state assembly sitting yesterday. Ong had asked if the state would go ahead with the PSR since it had requested RM10bil
from the government.

He also wanted to know why the state was embarking on the PSR when there were more pressing issues such as urban poverty. To another question by Lee Khai Loon (PH-Machang Bubok) on whether the PSR would
be scaled down with the proposed issuance of bonds, Chow said it was not a “free scheme”.

“Someone’s got to pay for it and in this case, the onus is on us. As such, the PSR would be the best model to pay for the LRT, Penang Island Link 1 (PIL1) and other infrastructure projects, ” he said. Chow told reporters later that if the loan was guaranteed by the government, it could be obtained with lower interest.

“With the guarantee, we will be eligible for a grading triple A and are presently working on the mechanisms as we received the letter on Oct 15, ” he said.

The state embarked on the controversial PSR model, which involves reclaiming three islands of 1,821ha in the south, to finance the RM46bil Penang Transport Master Plan, of which the RM8.5bil LRT and RM7.5bil PIL1 are components.