Split up PTMP projects to attract more investors, say experts

Chief Minister Chow Kon Yeow (left) and Canadian High Commissioner to Malaysia Julia Bentley speaking to

reporters after the Penang Transport Forum 2019 in George Town today.

GEORGE TOWN: It is better to split the RM46 billion Penang Transport Master Plan (PTMP) into different components to make it easier to get private funding, transport financing experts said today.

PTMP is Penang’s plan to alleviate traffic by improving connectivity on the island and mainland through a series of transit lines and highways crisscrossing the state.

Khair Mirza, an associate director of the Canadian infrastructure company Modalis, said the PTMP was “too risky” for private investors as everything was lumped into one project.

He said PTMP’s rail, roads, reclamation and other projects ought to be decoupled so that risks and costs can be reduced and to get more investments.

“We appreciate the complexity and the scale of the PTMP. It will be challenging to get funding as there are different parts in the plan.

“Bundling the projects into one entity makes it riskier. These risks in the project would make things more expensive.

“This might make investors shy away from it.

“The projects should begin with baby steps, one at a time.

“That way, it would be simpler to fund and there are better chances of the project getting private funding,” he said at a panel discussion titled “Financing Capital Projects” at the Penang Transport Forum 2019.

Modalis Infrastructure Partners Inc associate director Khair Mirza (left) with Export Development Canada’s Klaus Houben

(second from right), Bombardier’s Ritesh Kashyap (right) and OMERS’ Michael Koortens (second from left) at the forum today.

The forum was hosted by the Malaysia Canada Business Council and was attended by Chief Minister Chow Kon Yeow and Canada High Commissioner to Malaysia Julia Bentley.

Khair said the proposed Bayan Lepas Light Rail Transit (LRT) project, for starters, should be viable, commercially, to attract more private funding.

He said LRT, ideally, should have a stop within the airport terminal, so that it would be attractive to investors. Currently, the airport LRT station is proposed to stop outside the terminal.

“We must also ask, do we have the best option on the table? If the route is not commercially viable, then it should be changed,” he said.

Meanwhile, Ritesh Kashyap, head of structured finance (Asia Pacific) at Bombardier Transportation, Singapore, agreed with Khair, saying PTMP’s projects should not be lumped together.

He also said only specialist companies in related fields ought to be hired to do work on their speciality, such as rail experts for rail-related works and so on.

“If you bundle a few things that don’t go together, we have to conduct a risk analysis of what could happen.

“A social viability study ought to be carried out to see what other transport systems are more viable,” he said.

Chow: PTMP group of projects firmly set in place

After the forum, Chow said the PTMP group of projects have been firmly set in place and there was no likelihood of changing that.

Chow said input from the speakers would be considered in deciding the financing architecture of the PTMP.

Separately, Chow also said tenders for the PTMP’s Pan Island Link 1 (PIL1) highway, Penang South Reclamation (PSR) and the LRT project would be called in the second half of 2020.

“I believe many interested companies will put in their bids so that the government can choose the best solution and best financial architecture for PTMP.

“We also welcome international bidders to take part in the bid as it would provide great technological transfer to locals.”

The LRT will cost 8.5 billion, the PIL 1 highway RM7.5 billion, and the PSR RM10 billion.

The PTMP envisages meeting the transport needs of the public over the next 20 to 30 years.

It will be financed by auctioning 1,821ha to be reclaimed through the three-island project to the south. The first island will take eight to 10 years to be ready, with the rest ready in 20 years.