‘We have been waiting for the federal government for so long’

This is Part 2 of a story that ran yesterday. Click here to read Part 1.

The Edge: How difficult will it be for you to implement the Penang Transport Master Plan (PTMP), which is one of the biggest, if not the biggest, projects in Penang?

Lim Guan Eng: It is the second biggest project in Malaysia after the Mass Rapid Transit system in Kuala Lumpur and the biggest for the state.

We must have a public transport system and we need to solve some of our connectivity problems. That is why we have no choice (but to implement the PTMP). We have been waiting for the federal government for so long.

We were promised three times. I’m not talking about Pak Lah (former prime minister Tun Abdullah Ahmad Badawi). Pak Lah promised but, of course, before he could implement it he left. (Prime Minister Datuk Seri)  Najib (Razak) has made promises three times only for them to be broken.

What kind of promises has the federal government made?

That it would do the LRT (light rail transit system). And when the promises were not fulfilled for the third time, we said we cannot just keep waiting, Penang is choking with traffic congestion. We refuse to wait and to be choked to death.

We came out with our own model, and the difference between the LRT suggested by Najib and our plan is that our plan encompasses the mainland. It is not island-centric.

What did the federal government promise it would do to implement the LRT project?

That it would build it and finance it.

Everything would be taken care of by the federal government for the LRT project?

Yes. We have not been given any approvals (for the PTMP). When we tried, the (federal government) refused to even reply to our letters, so, we thought it may be easier to go through the private sector as it has ways that we do not have.

Does that mean Gamuda Bhd and the consortium will have to get federal government approval?

Yes. Gamuda and the SRS Consortium have to plan the alignment, the financing and get approval from the federal government.

Would that mean the plan still very much depends on the federal government?

It’s at the early stages, it rests on whether the federal government gives its approval or not. But how can the federal government not approve when it is not financed by it?

At the moment, the PTMP hinges on federal government approval. Even if you get the approval, when it comes to the important part — the financing mechanism that involves land reclamation — again, you would need the federal government. Is that the scenario?

Yes. That’s nothing new, everyone knows.

How confident are you that this plan will actually materialise?

That’s why I said we have to wait and see. The project delivery partner (PDP) submits to the federal government, it approves and we can proceed.

Then we have to approve the financing model, which is through land reclamation. If the federal government approves, it approves everything, including the proposed land reclamation by Gamuda. After the federal government approves, then the PDP has to submit to the state government for final approval.

How do you derive the value of RM27 billion?

It is the price that the PDP has calculated. Originally, it included the tunnel and all that, but now with the costs escalating, we are looking at a higher amount, about RM35 billion to RM40 billion, excluding the tunnel.

What is your budget?

Our budget will depend on how much it will cost. So, when we talk about reclamation, we reclaim sufficient land to defray the cost.

Do you have a ceiling for this?

No. You must remember when the cost goes up, the price of land reclamation and the gross development value will also go up. It all depends on the land you reclaim, so the proposal for land reclamation the PDP gave ... it will reclaim enough land to defray the cost of the project.

This also includes the roads, not just the LRT.

So, that does that mean when the cost goes up, more land will have to be reclaimed?

That is why they are suggesting a maximum of around 4,500 acres.

The 4,500 acres is for RM27 billion?

By that time, we do not know what the land price will be, so, if it goes up, less land will be needed. It commensurates with the cost.

Is there any other option to finance the PTMP, other than land reclamation?

I am actually willing to take your advice ... what other options are there? We cannot take a bank loan, state
governments are not allowed to borrow money. We cannot issue bonds, we are not allowed to issue bonds, so, the only thing we have is land.

The main thing I would like to stress here is that we have no other financing models. If I could issue a bond, I would issue bonds. If I could borrow money from the Asian Infrastructure Investment Bank and China’s One Belt One Road Programme, I would do so, but I can’t, because any loan the state government takes has to be approved by the federal government

You are aware that land reclamation has always been a difficult issue in Penang. Why did you decide to go ahead?

You see, land reclamation was not done properly previously. Those involved went through the seabed. They dug out sand from the seabed and that has consequences. This time, we are making sure it is done properly because we do not have any private interests in the land reclamation project itself. So that, in itself, is the difference

What do you mean, no private interest?

No private interest. Most land reclamation concessions that were issued had private interests involving political leaders themselves. We don’t have private interests so we make sure it is done properly and environmental safeguards are fulfilled.

The opposition has always been against toll roads and, of course, you have explained your situation here. In order to get the project going, to obtain the necessary approvals, you have no choice but to burden the people, to charge toll for the undersea tunnel.

Only the undersea tunnel will be tolled. We don’t charge tolls in Penang. [Roads are] given gratis by the state government ... The only toll we collect is for the first bridge and the second bridge.

We feel toll-free roads can be sustained, but as far as the Penang undersea tunnel is concerned, we said we don’t want to fight with the federal government.

If we were to give a toll-free tunnel, it would probably sue us, give us a lot of obstacles and block us.

Once we charge the same rate, we give them no reason to block us and true enough, they did not block us. The point is, the second bridge is 23.5km long and the undersea tunnel is 7.2km, if you are a commuter, which would you chose? Same price but shorter distance.

So, because you want the PTMP to kick off and to avoid unnecessary hassle with the federal government and to get the necessary approvals without obstacles, you decided to charge the toll?

Yes, at the same rate as the second bridge, but for a shorter distance.

If you waive the toll, how much would that add to your financing? Would you need to reclaim more land?

Yes, but not much more as the toll doesn’t really add much.

Gamuda is the PDP. Was the ability to secure approval from the federal government a consideration in the selection of the PDP?

Actually, we do not know who has the ability, so we just say it is at your own risk. But this is only the first stage. After the approval, the conditions will be drawn up, the framework, the financial architecture and the tendering architecture, then contractors will be appointed by open tender. Basically, the state appoints contractors, the PDP cannot conduct an open tender, only the state government can do that. But the PDP will advise us on the proper conduct of an open tender to appoint contractors, which may involve international companies.

So, for yourself as chief minister, the PTMP is your biggest project?

It is the biggest in Penang’s history.

How has it panned out so far? Any unexpected hiccups?

There have been a lot of hiccups. The federal government is one big hurdle. But what disappoints me is that people are cynical and equate us with the Barisan Nasional.

Who are these people?

Defectors and all that.

You mentioned that the long wait for the federal government to act on it was expected, but are there people who oppose the project?

Allegations have been made that we were bought out, bought over, which I feel is very unfair. They look at us through the same lens as for the Barisan Nasional’s reclamation project.

We are using open tenders, there is no hanky panky, no personal interests. We are clean, we don’t take money. These are just some of the allegations that have been made against us. Of course we are upset by these allegations, I mean it is an open tender, there is no way to steal.

Because of that, we have to meet these allegations head on and that is why there is an extra back and forth. This is all by an open competitive process that is overseen by KPMG. The state government has nothing to hide.

That is why we have public consultations even before we approve. Normally, public consultations take place after approval but here, even before approval, we did a public consultation. And I think we have had many rounds that have been done in all languages.

This project can benefit the people of Penang and, as you said, Seberang Perai. Why would the federal government not approve?

We can think of a lot of reasons, but I think the principal reason is we do not have the inside relationship that other states may have. For example, without mentioning names, some states can get approval in principle very quickly for some projects and everything is speeded up.

Is there a plan B?

If this doesn’t work we hope there will be a change in federal government for Putrajaya to agree. But I don’t think it will come down to that. We are hopeful that the federal government will look at it from a point of public interest since it is not financing it, it is being  financed by the people of Penang themselves and it will look at it positively. We hope approval in principle can be forthcoming quicker, that’s all.

At the moment there is no plan B?

No, if the federal government rejects [the project], then we are dead.

But as a leader, for the benefit of the people, if this cannot happen, would you find other ways?

Public transport is a federal decision, if there is no public transport, there is no escape from traffic congestion issues.

The PTMP has drawn criticism. How do you feel now as people see you on the other side of table, unlike before when you were in the opposition?

We have always opposed the Barisan Nasional government’s projects because there was no open tender, no public consultation and the need for environmental safeguards was not taken into consideration. I think we have done all three.

We have open, competitive tenders. We also carry out public consultations before we give the final approval and there are environmental safeguards.

Don’t forget, Penang has the highest recycling rate in the country. Our recycling rate is 32%, the national average is only 10%. We have opposed the projects in terms of delivery and we have shown that if we comply with the three parameters, it will benefit the people.

The fourth factor, which is understood, is that you need to have competent people running it.

Would it be correct to say that in the past, the comments you made about certain projects were because they lacked these four factors?

Yes, it is very important to have competence, accountability and transparency. It is very important to have competent people because if you are not competent, you will be a burden and not a benefit.

How long do you intend to lead the state government?

That depends on the people and my party, the decision is not mine.

Is there a policy in the party, like term limits?

In the government, we don’t have limits but for party posts, I’m limited to three terms as the party secretary-general. For the chief minister’s position no.

Should there be a limit?

I have my own views on that, which I can’t share with you. I think that is something that needs to be decided not only by my party but by Pakatan Harapan.

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This article first appeared in The Edge Malaysia on Feb 1, 2016. Subscribe here for your personal copy.