News: Penang Undersea Tunnel Not Funded With Cash Unlike Putrajaya’s Road Projects

Feb 13, 2018


The concession agreement for Penang’s proposed RM4 billion undersea tunnel is not conventional because the federal government is not funding the large-scale development.

“Instead, the project is being funded via a land swap deal,” said the state government’s Works, Utilities and Committees Chairman Lim Hock Seng. This is because the state authorities don’t have other financial resources. Also, the land’s value is based on projections made by the Valuation and Property Services Department (JPPH).

“Typically, such mega project requires the involvement and funding of the federal government. The financial model is in accordance to the model adopted by the federal government and the previous state government for several projects that were planned or implemented, such as the Jelutong Expressway, Butterworth Outer Ring Road (BORR) and the Penang Outer Ring Road (PORR), which was aborted,” he noted.

Lim said this in reply to Works Minister Datuk Seri Fadillah Yusof’s claim that the tunnel’s 30-year toll concession rate, which is similar to Penang’s second bridge, is one of Malaysia’s most disadvantageous toll concessions.

Fadillah noted that the contract differs from typical toll concessions, wherein the toll concession firm finances the building cost then collects toll after completion within a period of time.

Moreover, Lim highlighted that if the 6.3km undersea tunnel fails to attract sufficient demand once completed, the Penang state government will not be required to indemnify the builder or concessionaire.

“The state government does not give any traffic volume guarantee like the federal government. If there is any drop in revenue, profit or traffic volume, the government shall not be liable for any loss that may be incurred by the company.”

“Also, the 30-year concession period shall not be extended. This is in contrast with the first (Penang) bridge where the concession period was extended by the Federal Government.”

Meanwhile, Prime Minister Datuk Seri Najib Razak claimed that there’s no need for an undersea tunnel as there are currently two bridges linking Penang Island with the mainland. Fadillah also insisted that the first and second bridge are 87 percent and 50 percent utilised.

Regarding this, Lim noted that the usage rate stated by Fadillah does not reflect the real situation. In fact, traffic on the first bridge barely moves during peak hours.

“The traffic demand for the first bridge was even projected by Jambatan Kedua Sdn Bhd in 2001 to reach up to 163,400 vehicles per day by 2020 in comparison to the maximum capacity of 155,000 vehicles per day even upon widening.”

Lim also said that the second bridge was built to divert about 20 percent of the traffic from the first bridge and boost the development in south Penang. “Hence, this does not resolve the congestion issue and the tunnel is required to be explored further as part of an efficient traffic dispersal network.”

The undersea tunnel forms part of Penang’s RM6.3 billion integrated infrastructure project. These includes a 12km paired-road from Jalan Tanjung Bungah to Teluk Bahang, a 4.6km bypass between Bandar Baru Air Itam and Lebuhraya Tun Dr Lim Chong Eu, and a 4.2km bypass from Gurney Drive to Lebuhraya Tun Dr Lim Chong Eu.

The mega project was secured by Consortium Zenith Sdn Bhd through an open tender. However, it has become controversial due to the RM305 million cost of feasibility studies for the undersea tunnel. As such, it is presently being scrutinized by the Malaysian Anti-Corruption Commission (MACC).  

Image sourced from Penang Wikia


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