The Penang transport masterplan, put out by SRS Consortium, has come up with projected ridership figures for the expensive elevated LRT from Komtar to Penang Airport. What is crucial is whether these ridership figures are realistic or inflated – for that will determine whether or to what extent the people of Penang will be saddled with operational losses.
Yes, operational losses. It is relatively easy to build expensive infrastructure. But will it result in expensive operational failures if actual ridership fails to match what was projected?
Once the project delivery partner collects its fees and the infrastructure firms are paid from the proceeds of sales of land reclamation – a total of some RM40bn – who will bear the burden if there are operational losses? The state government? But its annual revenue is only RM0.7bn and it has its regular operational and development expenditure to meet – which doesn’t leave much left over to cover any losses.
Penang Forum has just released a statement as shown below:
When will full SRS report be released as promised?
In The Star today (17 May 2016), YB Chow Kon Yeow reportedly stated that the estimated number of passengers taking the LRT from George Town to the airport by 2023 is 116,000 daily. This works out to be 42.34m yearly. Were these estimates provided by the SRS consultants in their report? If yes, they should be made public.
Penang Forum had earlier written that the SRS population projections are overly optimistic compared to that of the Department of Statistics of Malaysia (2.45m versus 1.89m persons by 2030). Hence projected ridership could be inflated.
We were told that ridership depends on traffic volume; hence tourist arrivals should be factored in. The total number of tourists visiting Penang in 2015 was 6m and for the whole of Malaysia 25.7m.
Let us assume the tourist arrivals are doubled to 12m by 2023, and half use the LRT; we would still have 36m ridership to fill the gap to reach 42m. This works out to a daily ridership of 99,000 by local Penang people on just this LRT line.
Do we have so many people in Penang island to fill this gap, taking note that in February 2016, RapidPenang buses carried only 93,000 passengers daily for the whole state of Penang after almost 10 years of operation.
It is the release of such data in drips and drabs that sets off red lights and raises our concerns. Did SRS provide these estimates in their report to justify the LRT line? If they did not, it is even more worrying that a recommendation can be made without a proper prior financial feasibility study.
The Penang state government must learn lessons from the financial calamity of the Kuala Lumpur LRT and monorail projects in the late 1990s and early 2000s. Within the first few years of operations, the federal government had to pump in close to RM6bn to bail out the debts of these companies! Will Penang have the federal government to bail us out?
Among the reasons for the financial failure were the hugely inflated ridership projections.
For example, the actual daily ridership of LRT2 was 12,000 or 3 per cent of the projected ridership (of 360,000) in 1999 when it started operation. Even after four years of operation in 2003, its ridership was 160,000 or 44 per cent of what was projected.
LRT1 performed better but the actual ridership was also way below what was projected at 38 per cent in 1999.
As Dr Lim Mah Hui, MBPP councillor reminded us in his press statement of 10 May 2016, it is easy to physically build public transport, much more difficult to manage and maintain them as financially viable projects. Hence, detailed financial feasibility studies with different options must be presented to the public for deliberations before construction projects are awarded.
Why should the Penang state government be seen to be defending the SRS proposal at the review stage? Instead, they should be asking penetrating questions and subject SRS’ proposal to proper review by all stakeholders to ensure the best options are selected.
The projections given by SRS must be substantiated with credible assumptions. And only a full disclosure of their report can do justice to convince people that their proposals are the best option for the people of Penang to support.
Penang Forum steering committee
17 May 2016