The state government says the SRS proposal for transport infrastructure needs RM2.3bn in bridging loans.
The bridging loan is apparently needed to finance the costs incurred in the first two years – preparation work, feasibility studies for the railway scheme, EIA costs, LRT and highway construction costs – before most of the reclaimed land is ready to be sold.
The RM2.3bn in the first two years is made up of:
1.0 First island land sales
(1.6) First island reclamation cost
(0.5) Second island reclamation cost
(0.8) LRT cost
(0.3) Pan Island Link six-lane highway
(0.1) George Town e-bus and catamaran
But SRS in its transport proposal claimed that this RM2.3bn would be a heavy amount for it to shoulder; so it assumed that the state government would reduce this interim deficit by raising RM1.0bn through the sale of land to third party developers via open bidding as follows:
- Pesta site (35 acres)
- Green Lane (25 acres)
- Jalan Glove (20 acres)
Total 80 acres.
The state government was expected to raise RM1.0bn from these sales, leaving SRS to raise bridging finance for the remaining RM1.3bn via internal funding (RM520m) and debt financing (RM780m) based on 6.5 per cent interest rate. Interest from the debt financing (expected to be RM300m) would be eventually charged back to the project.
So what happened to that idea?
When was the decision made – and by whom – for the state to seek external financing to raise RM1.0bn?
Was this ever discussed or brought up at the Penang Transport Council meetings, which was examining the funding model? If not, why not?
To understand why we should tread warily on financing from China, please read these three articles by former Malaysian diplomat Dennis Ignatius:
And this one by Nurul Izzah: