Butterworth ring road land: Another ‘cheap sale’?

The right to some 1600 acres of reclaimed land in Butterworth was allegedly given to a private firm virtually for free.

The firm Rayston only had to pay RM50m in reclamation costs and build a highway, the cost of which is being recovered from toll collections, claimed Penang Chief Minister Lim Guan Eng in a statement.

The plan for a privatised 14km Butterworth Outer Ring Road was mooted in the 1990s. Under the Build-Operate-Transfer model, the firm was supposed to come up with its own capital to finance the project and would then collect toll for 30 years before transferring the highway to the government. It was also given the right to reclaim land.

The previous state government’s position was that the concessionaire had to relocate some 1700 settlers and the various buildings and places of worship standing along the route. The concessionaire was given state land and granted additional land reclamation rights.

In April 1997, the federal government signed an agreement with Lingkaran Luar Butterworth (Penang) Sdn Bhd (LLBPSB), a company within the obscure Rayston Group. Under the agreement, the firm would bear the construction cost of RM420m (IJM was among those involved in the actual construction) while the federal government would finance RM275m for the construction of the Prai Bridge, bringing the total construction cost to RM700m (RM700m for a 14-km highway?!), excluding federal government financing of land reclamation costs. The concessionaire was also given a low-interest loan of RM86m.*

The concessionaire was also expected to finance 5km of the Butterworth-Kulim Expressway beginning from Butterworth and a ‘kos pajakan’ of RM50m. In return, the company would be allowed to collect toll at the present Sungai Nyior toll booth, though this was deferred before subsequent implementation.*

In 1999, the Penang state government entered into an agreement with Rayston Consortium (Butterworth) Sdn Bhd (RCBSB), also within the Rayston Group, for the firm to relocate settlers along the route.*

Under the agreement, the firm was given the right to reclaim land:

• 240ha for the expansion of the North Butterworth Container Terminal and port-related use;
• 120ha for a buffer zone for future port use; and
• 280ha for development by the firm (of which about 80ha would be  for public infrastructure and open space to be handed over to the state or local government).*

That’s a total of 640ha or close to 1600 acres.

In addition, the firm was awarded two plots of  7.5ha and 12.8ha of state land in 2001 to build seven government quarters in Bertam within three years to replace those affected by the ring road.* (Was this complied with within the time stipulated?)

Was there a need for the Butterworth Outer Ring Road in the first place? Even though the tolled road was opened five years ago, it is still underutilised. Most motorists avoid Borr as a 10-minute ride costs a total of RM2.50, payable at two toll booths. On Sunday evenings, about the only people benefiting are the Mat Rempits, who race along the coastal ‘circuit’, jeopardising their own and other motorists’ safety. Worse, Borr has made it more difficult for Butterworth residents to gain access to the beach front.

In other land deals raised by Guan Eng:

• 80 acres of prime land in Pulau Jerejak was sold to Urban Development Authority(UDA) without open tender on 15 January 2001 for a lease period of 60 years at only RM3.72 per square feet.
• 18.7 acres of land in Midlands Court and over 4 acres in Prangin Mall were sold by tender but allegedly not to the highest bidder. Instead for both sites, the second highest bidder was selected, he claimed.
• 500 acres of reclaimed land was awarded without open tender for the Penang Outer Ring Road (PORR) project.

Guan Eng added: “If BN is sincere about building low-cost housing, why is it that BN did not fulfil its promise and plans to build two 17-storey block of low-cost flats on the present 1st Avenue and Traders Hotel sites?”

The Penang state exco has now decided to set up a special exco committee to look into “cheap land sales of at least 4000 acres of state land by the previous state government”.

Penang state exco member for local government and traffic management Chow Kon Yeow will head this special committee. The Land Office, the two local governments and the Penang Development Corporation have been directed to give full co-operation to Chow.

* Much of this info was gleaned from a response to a written question submitted at the Penang State Assembly in 2007. See the State Assembly members’ web portal.