Latest: It has been announced late this morning that the PICC project has been awarded to Eco Meridean Sdn Bhd, a subsidiary of S P Setia Bhd, and the project will now be dubbed ‘Subterranean Penang International Convention and Exhibition (sPICE) Centre’. The work, which involves upgrading the existing Pisa facilities as well, will reportedly cost “at least” RM300 million (or more?) using a Build-Operate-Transfer model.
According to my source, the tender proposal had expected the state to provide RM50 million in funding. But we now hear that that the burden of coughing up these funds will fall on MPPP (i.e. Penang rate-payers), which is already hard-pressed for funds to upgrade basic public amenities such as public markets and pavements. Has the RM50 million expenditure been approved in a full council meeting of the MPPP? Was it even on the agenda of the last full council meeting of the MPPP? Who is really running the MPPP?
If this RM300 million project, which will take three years to complete, is really feasible, the state government should show us the projections. S P Setia may be able to deliver the convention centre but can it guarantee that it generates operational profits? If not, who will absorb the operational losses and for how long? Realistically, how much can MPPP expect as returns for its RM50 million outlay and when? What about the hidden costs and opportunity costs that may not be reflected in the RM300 million, especially the cost for the use of the MPPP’s land and interest lost by the MPPP on the RM50 million? How much is S P Setia going to pay MPPP for building on council land? Why should Penang rate-payers subsidise this project? Questions, questions… but will we get real answers?
My report early this morning before the official announcement:
S P Setia Bhd has been selected for the job of the Penang International Convention Centre, the cost of which has ballooned from initial estimates of around RM50 milllion bandied about earlier to some RM250 million RM300 million now.
According to a source, negotiations are underway on the terms based on what S P Setia wants from the state government and the MPPP. It is believed the state government was asked to provide RM50 million to help fund the project. I don’t think this is the best way for the state to spend its limited financial resources.
The design for the PICC, to be constructed underground, is believed to include a roof-top garden, a hotel and a retail section. The MPPP has requested a traffic dispersal study. It is not known if a socio-environmental impact study will be commissioned.
The concession agreement is likely to be based on a build-operate-transfer model.
The MPPP, which currently owns the Penang International Sports Arena on the same site, had closed the invitations for the PICC tender last September. The hotel and the PICC are expected to be built next to the existing Pisa.
It is believed a 99-year lease for the hotel was initially proposed, but this was rejected by the MPPP.
The major shareholders of S P Setia are Amanah Raya Nominees (Tempatan) Sdn Bhd-Skim Amanah Saham Bumiputera (20 per cent), EPF (14 per cent), Tan Sri Dato’ Sri Liew Kee Sin (12 per cent) and PNB (7 per cent). As PNB also operates the Amanah funds, this makes the S P Setia virtually a GLC, managed by Liew, whose personal net worth has been estimated by Forbes as RM460 million (US$150 million), making him the 31st wealthiest Malaysian.
Where is the return for the PICC coming from? Can it really be viable at this cost?
In the name of transparency, the state government must announce the latest developments officially. We don’t want the same old BN way of doing things in secret. The tender has been selected: so the state government must announce who the winning bidder is and what the exact terms of the proposal are. What exactly is the bidder asking or expecting (whether expressed formally in writing or otherwise) from the state government and the MPPP in return for handling the project? We want to know the details. This way, the public will be able to decide what is at stake and whether it is a viable bid that won’t strain public coffers, burden state institutions or affect surrounding areas.
Transparency and accountability, please.