Are there enough growth drivers to allow developments of this type? In this case, the local government is using reclamation to finance public works however, we believe studies should be shown of possible alternative sources of financing instead.
In Melaka, the state authorities are evaluating interesting ways of financing public works and somehow it does seem to be the smarter way.
Please feel free to comment.
Land reclamation to help fund RM27b Penang master plan
By Sangeetha Amarthalingam & Looi Sue-Chern
GEORGE TOWN: The Penang government is expected to partly finance the RM27 billion Penang Transport Master Plan (Penang TMP) via a land-swap deal, a government source told The Edge Financial Daily.
He cited the state’s deal with Consortium Zenith BUCG Sdn Bhd, which had been granted some 3.64ha of land on Seri Tanjung Pinang 1 (STP1) at Tanjung Tokong in Penang, worth RM305 million, in exchange for undertaking in 2013 the controversial RM6.3 billion Penang highway and traffic mitigation projects involving three major inland road works and a 6.5km undersea tunnel linking Gurney Drive and Bagan Ajam in Butterworth.
Under the proposed Penang TMP, the Penang government plans to reclaim a 50.6ha bed in Middlebank, located between Penang island and the Sungai Pinang river mouth.
The source said the areas within the Penang government’s jurisdiction in the TMP would likely be funded through the land swap deal.
The source also noted that the reclamation of the Middlebank land would contribute RM18.3 billion in land premium to the state’s coffers if the rate were set at a minimum of RM280 per sq ft.
“The Penang TMP is broken into three portions — highway construction, institutional policy and public transport. Parts in the TMP that require state funding such as state and local council roads would be done through the land swap.
“[That’s because] the state does not have the money amounting to several billion ringgit to pay the project delivery partner [PDP] for the Penang TMP,” the source added.
The Penang government has yet to issue the request for proposal (RFP) for the Middlebank reclamation project, the source said.
It has also yet to announce the successful applicant for the RFP to draw up the land use, project concept and provide consultation for the Middlebank reclamation, which closed on May 15 last year.
The source also pointed out that besides partly serving to finance the Penang TMP, the Middlebank project is touted to become the state’s new commercial centre in the future.
The Penang TMP, completed in 2012, aims to resolve traffic woes in the state, especially on the island.
It involves massive infrastructure works and a comprehensive public transport system incorporating light rail transit (LRT), trams, buses and catamarans, expanding roads and building new highways.
It also includes the ambitious undersea tunnel. The feasibility study for the undersea tunnel reportedly started last month and work on the multi-billion ringgit project could begin next year.
Earlier at a press conference, Penang traffic management exco Chow Kon Yeow said the state government has received proposals from six bidders to be PDP of the master plan, which will be rolled out in stages beginning 2017.
Of the six, two are foreign consortiums and three are local public-listed construction giants, he said, without revealing the companies. The state has appointed consultancy firm KPMG to lead the evaluation of the bids.
“By May, we should be able to decide which firm to pick and sign an agreement with. After that, there will still be work to refine the plans before tenders can be called to appoint companies to start the work. They will need a couple of years to finalise engineering plans before rolling out the projects,” said Chow.
“We expect the first project of the master plan to be rolled out in 2017,” he added.
The closing date for bidders to submit their proposals was on Monday. The PDP will also be responsible for calling for open tenders for various projects within the Penang TMP, with consent given by the state government.
Instead of appointing only one PDP as initially planned, Chow said due to the size of the master plan and the many projects and packages involved, two PDPs may be appointed to split up the projects for better management.
Bidders must propose implementation plans as well as financing for the projects, he said, adding that this may include land swaps and land reclamation rights.
“We will have to study the proposals by the bidders first to see what funding method is viable,” said Chow.
On Aug 27 last year, Penang Chief Minister Lim Guan Eng had revealed that Chinese construction firms China Harbour Engineering Co Ltd (CHEC), China Railway Construction Corp (CRCC) and Sino Hydro Corp Ltd were among those that had bought the RFP documents.
Within Penang, CHEC has teamed up with UEM Group to become the main builder for the RM4.5 billion Sultan Abdul Halim Muadzam Shah Bridge, while CRCC is one of four companies within Consortium Zenith BUCG tasked to execute the RM6.3 billion integrated infrastructure project.
Meanwhile, The Edge Financial Daily learnt that the Penang government had recently signed a memorandum of understanding with The Export-Import Bank of China (Cexim), a state bank solely owned by the Chinese government, for the Penang TMP.
“With the securement of Cexim’s interest to provide bank loans to its Chinese corporations to carry out projects here, the state believes more Chinese companies would show keen interest in the Penang TMP.
“At present, Cexim is sorting out the legal and technical requirements or provisions with the federal government because the funding of companies for projects outside China requires government-to-government dealings,” the source said.
Source : The Edge Markets