Why Penang’s expensive LRT plan must be reviewed

This is the fifth article in a series to explain why the Penang state government should get an independent review of the Penang transport masterplan. It was written by Dr Ahmad Hilmy, an associate professor at USM (Technology cluster — transport system) and Dr Lim Mah Hui, a former professor, international banker and Penang Island city councillor.

Much has been said about the Penang state government prioritising the construction of a light rail transit (LRT) system from George Town to the Penang International Airport.

This is part of several other mega infrastructure projects under an altered version of the Penang transport masterplan, which ballooned from RM27bn under Halcrow to RM46bn under SRS Consortium.

What has not been aptly explained is why the state has chosen the LRT, which is not only much more expensive to build but also costlier to operate and maintain, compared to alternatives such as a tram or a bus rapid transit system.

Curiously enough, the state is insistent on pursuing the LRT project even though the tram and bus rapid transit were recommended in the original Penang transport masterplan designed after a meticulous study by UK-based engineering consultant Halcrow.

Despite the Halcrow transport masterplan having been officially adopted by the state in March 2013, it was radically redone by a Gamuda-led corporate entity named SRS Consortium, which was awarded the contract to implement the plan.

But is the projected LRT ridership by SRS realistic? Has the state done a financial analysis on the expected annual deficit of operating the LRT, as opposed to a bus rapid transit or tram system? Is it putting Penang at financial risk?

Why was no comparative study done on the financial viability of alternative public transport systems before a choice was made?

Table 1 shows that it is three times more expensive to construct an LRT (RM220m/km) compared to a tram (RM80m/km) and 4.5 times costlier compared to an elevated bus rapid tranist system (RM50m/km).

SRS estimated the annual operating and maintenance costs for the LRT line at RM170m, while the Halcrow report estimated the costs for the tram line to be RM22m.

Massive losses

Is SRS’ projected ridership for the LRT at 42m per year (116,000 per day) realistic? Or is it inflated? A recent article similarly questioned the 42m ridership figure.

The writer said: “How is it possible for the Penang LRT to have an annual passenger journey per person much higher than most MRT lines in London, Singapore and Kuala Lumpur when it does not have an interchange station with other rail links during its first year of operations?”

As a comparison, the daily total ridership for Rapid Penang buses in the whole state is still less than 100,000 per day after more than 10 years of operation.

Using the experience of Kuala Lumpur’s three LRT lines as a guide, the actual ridership for the three lines ranges from 3% to 20% of projected ridership, with an average of 18%.

Hence, we believe that a projection of eight million trips (19% of the original projection, ie 21,920 trips per day) is more realistic than the 42m per year claimed by SRS. Based on the eight million trips costing an average of RM4 per trip, the projected deficit for operating the LRT is RM138m per year. In contrast, the projected surplus for the tram is RM10m a year. See Table 1.

While this is a back-of-an-envelope estimate, the state government must commission an independent comparative financial analysis of the various modes of public transport systems, which it has not done, before making such major decisions.

The KL-Klang valley LRT experience is further instructive. Within the first two years of its operation, the projects racked up massive losses due to inflated financial projections. The federal government had to pump in RM5bn or more to bail out the operators. It would be irresponsible for the Penang state government to plunge the state into financial distress.

In conclusion, we call on the state to exercise fiscal prudence and conduct proper studies and comparisons with other cheaper and more sustainable public transport systems before leading Penang down a treacherous path.

Footnotes:

1. To make valid comparison across the different systems, only the construction costs, inclusive of the electrical and operating systems, are used. These numbers do not include land acquisition costs that vary significantly.

2. Halcrow recommended three tram lines for the island, each with almost equal distance, with annual operation and maintenance costs of RM67m. We therefore used RM22m as the cost for one line (see Table 11.5, Halcrow Report Vol 2).