Finance

Penang Chief Minister Lim Guan Eng believes that the state has come up with the most practical solution under the circumstances to deal with the island�s traffic problems � a massive RM6.3 billion traffic alleviation plan that will see three highways built on the island, and a third link built to connect the island and the mainland via an under-seabed tunnel.

Not everyone has bought into the project and Lim is facing strong and sustained opposition from a host of NGO�s and civil groups, who are against the plan for a variety of reasons.

Confident however that he has the support of the Penangites, Lim has told his opponents that he is willing to tie this project to his re-election campaign. In what is promising to be a hard fought election is it a bold move for any politician to take? Whether or not this move pays off for him will have to be seen.

In an e-mail interview, the Penang Chief Minister tells us why he is willing to stake his political future on this contentious multi-billion ringgit traffic alleviation plan.

Lim Guan Eng: It is important to bear in mind that the tunnel is not for today, but for the future. It will take at least 12 years to build it, as there are many feasibility and environmental studies to be conducted beforehand, including compliance with a Detailed Environmental Impact Assessment (DEIA). According to the recently-released Penang Transport Masterplan commissioned by the State Government and the Northern Corridor Implementation Authority (NCIA), a third link would be required by 2025-2030. We are merely bringing it to 2025.

Lim Guan Eng: The MoU that was signed in 2011 was non-binding and merely an expression of interest by the Beijing Urban Construction Group (BUCG). The Penang Transport Masterplan (PTM) was of course underway at the time, and the state played an active role in the process. The PTM had no objections to such road improvement programmes as it was so far off into the future.  Hence, the need for a future third link was already evident by then. The PTM did give priority to public transport which the state government had actively tried to establish.

However, the BN Federal government�s refusal to fulfil their 2007 promise to build a monorail and deliberate sabotage of efforts by the state government to implement an effective public transport has compelled the state government to look at the road improvement option. Apart from failing to fulfil their promise to build the monorail and the RM2 billion Penang Sentral transport hub which has not even commenced other unfriendly measures include:

The Penang state government will neither keep passively silent nor do nothing but will pro-actively plan a traffic dispersal project, comprising of three major highways and an under-seabed tunnel connecting Gurney Drive to the mainland in Bagan Ajam costing RM6.3 billion. In other words, four major highways for RM6.3 billion.

A full feasibility and detailed environmental study will be conducted before the plans are approved. If the EIA is not approved then the project will not simply proceed. This is the standard procedure in construction contracts. What�s more, the consultants will be appointed by the state and paid for by the contractor, rather than appointed by the contractor directly, in order to avoid conflict of interests.

All the state did was to pick the best contractor by open competitive tender, and the contractor will have to comply with all laws and regulations before its plans are approved for actual execution. That is the normal process in any project awards.  Hence the issue of an EIA not being undertaken does not arise.

Let us restate again that the evaluation and recommendation of the winning tender bid was made by two committees headed by the Penang State Secretary Farizan bin Darus and the Penang State Financial Officer Mokhtar bin Mohd Jait without any involvement of the Chief Minister. The entire tender exercise was a transparent and accountable process.

Hence there is no question of rushing as the proposal was first mooted in mid-2011, and the tender was called at the end of the year. The award was only made early this year, more than a year later. Public consultation was carried out before the tender was called and during the tender exercise.

Even after the tender was awarded, more consultative sessions such as town hall meetings were carried out with various groups and in different languages. Public engagement is a very important process for us.

Lim Guan Eng: It is not true that only bidders from China participated as there were bidders from non-China companies. They are all major experienced construction companies. This project is not easy as the companies have to source their own financing as payment is made through a land swap and not through cash. An under-seabed tunnel obviously requires a lot of expertise and experience, and there are not too many companies in the world with such capabilities. The MoU did not prevent other companies from submitting bids. As I said, the MoU was non-binding.

By conducting an open competitive tender, we managed to bring the price down from an estimated RM8 billion to RM6.3 billion. This is only possible because we conducted an open tender instead of direct negotiations. The consortium that won the bid is of course one of the major construction players not only in China but in the world. BUCG was responsible for building the famous �Bird�s Nest� Olympic Stadium in Beijing, while China Railway Construction Corporation have lots of experience in building roads and tunnels.

The project was not awarded to some RM2 crony company with no expertise or experience at an overly-inflated price but to companies with a combined paid-up capital of RM4.5 billion.

Lim Guan Eng: The tunnel link is not the best option � it is the only option to construct another link between the island and the mainland available to the state government. We are limited by options because the previous state government had seen it fit to sign away the rights of building a bridge to the Federal Government. Any bridge across the channel must get prior approval of the federal government. After studying the Federal-State agreement thoroughly, we were advised that a tunnel was not covered by the agreement, and hence that is why it was chosen.

A light rail track on the existing bridge is an excellent idea, and we have in fact promised to build exactly that if we manage to win Federal power. We plan to build a tram system not only on the island but also on the mainland, connected via the bridge.

The problem today is that all rail and land public transport comes under the purview of the Federal government, or SPAD to be exact. We cannot build rail transport even if can finance it.

At the same time, the state government cannot be held to ransom by the Federal Government who to date has intentionally starved Penang of public transport options. Even if the Federal Government is at fault, we cannot just sit back and play the blame game. That�s the easy way out. The state government must be proactive in resolving our congestion issues, or our growth and economy will forever be constrained.

Hence, the tunnel is our only option given the constraints.

Lim Guan Eng: A full Detailed Environmental Impact Assessment will be conducted to ensure that all risks are understood and catered for. We have publicly said that if the tunnel is unable to comply with safety and environmental standards, we will not proceed. The state government would also engage our own expert consultants to monitor and protect our interests.

Lim Guan Eng: These feasibility studies will be conducted over the next few years by a consultant to be appointed by the state government but funded by the contractor in order to avoid conflict of interest. Rest assured, there will be nothing to hide and everything will be conducted in an open and transparent manner.

Lim Guan Eng: The land that will be reclaimed by E&O in Tanjung Pinang area, which was approved by the previous government in 1999. The previous state government practically sold it for a song at RM1 per square foot.

Some acquisition on uninhabited land may be necessary but we will keep it minimal as the alignment is not finalised yet. It depends on DEIA study, as that will determine whether some are underground or an overhead elevated structure.

Lim Guan Eng: In principle, that should not be a problem as we are all for promoting the local industry. I believe that Penang companies are experienced and capable, and will not face any difficulties in rising up to the occasion.

Lim Guan Eng: RM6.3 billion is a sum that is beyond the means of the Penang state government. The state government budget in 2008 when we took over was only RM400 million, and it was a deficit budget. While we have managed to improve the state finances by leaps and bounds, increasing the budget to RM1.1 billion and a record surplus of RM138 million in 2013, the state is unable to undertake any sizeable infrastructure project by cash. We can�t even raise bonds independently based on the Federal Constitution without Federal Government approval.

Hence, the most viable method is to make available land for vital economic and infrastructure projects to benefit the state. However, the key difference in this �land swap� exercise is that it is conducted in a strictly open and competitive fashion. The contractor which requires the least amount of land from the state government wins the bid. And in this case it was BUCG which bid for the project at the �cost� of 110 acres of land.

In addition, let it be clear that there is no existing land being swapped. Instead, we are offering 110 acres of land in Tanjung Pinang that was earmarked for reclamation by the previous state government. This was sold by the previous Penang BN government for only RM1 per square foot, while in Sarawak, 100,000 acres were used to pay off  a mere RM200 million in debts for a bridge contract. In Sarawak a land swap of 100,000 acres for RM200 million without attracting any controversy as compared to 110 acres of land in Penang for this RM6.3 billion projects.

Lim Guan Eng: It is an under-seabed tunnel, not an underwater tunnel. In other words, it will go deep beneath the seabed, and hence will have little impact. In fact, studies have shown that an under-seabed tunnel has less environmental impact compared to building a bridge. In any case, a full DEIA will be conducted to assess the situation. If the DEIA is not complied with, the project will not simply proceed.

Lim Guan Eng: We are not touching the seabed, so there will be little impact to fisheries. However, there may be impact to the landing areas of the tunnel. But the areas in question are also land that had already been approved for reclamation by the previous state government. Whatever the case, studies will be conducted to ensure that there is minimal adverse effects to the local communities, especially fishermen.

Lim Guan Eng: The state government agreed to a toll for only 30 years as we did not want to go to a state of war with the Federal government. If the state government had not charged toll, we had to give up more reclaimed land and worse, the Federal government will have legal grounds to stop the tunnel project by claiming that we are deliberately sabotaging the toll collection for the second Bridge.

At the same time, the concession is only for 30 years, which is less than the 45-year concession of the Second Penang Bridge. In addition, we have created history by being the first toll concession in Malaysia not to include a traffic volume guarantee. In other words, the concessionaire will have to absorb any loss occurring from lower traffic.

Lim Guan Eng: We have tried very hard to cooperate with the Federal government during the last five years, especially where public transport is concerned. However, we have constantly been sabotaged, and there is no reason to think that such a situation will change anytime soon.

Firstly, the BN refused to fulfil their promise of building a monorail system, despite the tender already being awarded in early 2008. Secondly, they failed to deliver 200 extra buses to Rapid Penang, which was promised by prime minister Najib in 2010. Thirdly, they have also refused to allow the Penang Municipal Council (MPPP) to buy our own buses to provide public transport. Lastly, they have also rejected the Penang state government�s offer of RM10 million yearly in exchange for free bus services throughout Penang during peak hours.

Clearly, there will be no cooperation forthcoming from the Federal government. Hence, we cannot just sit and do nothing. By doing nothing, Penang will be choked to death by traffic.

Lim Guan Eng: This is what democracy is all about. We will abide by the people�s choice. If they do not agree with the projects, we are prepared to be told so through the polls. However, based on the general public�s feedback in all the town hall sessions that we have conducted recently, a large majority of Penangites are supportive of these measures that will ease traffic congestion, something which will become a great bane if left unsolved. Like the state government they do not want the young to grow up as a traffic jam generation. As a responsible government, we must prepare the future for the young.