Putrajaya pulls back govt guarantee for Penang’s RM2b loan to finance LRT project
Proposed Bayan Lepas LRT
Putrajaya has decided not to proceed to grant a government guarantee for a US$500 million (RM2.04 billion) loan application by Penang to partly finance its RM9.5 billion light rail transit (LRT) project.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the decision was in line with the revised revenue and income projections for the country, as well as the government’s focus to restore the economy, following the Covid-19 pandemic.
Should the loan go through, Tengku Zafrul said it will increase the federal government’s commitment on operational and development expenditure, as well as other off-budget projects borne by the government such as the MRT Line 1 and 2 (RM71 billion), LRT3 (RM17.7 billion), the Pan Borneo Sarawak Highway (RM13 billion) and the East Coast Rail Link or ECRL (RM48.85 billion).
“Any new loan with a government guarantee should be scrutinised as much as possible, as it will increase the government’s contingent liability. Unchecked increases in the government’s contingent liability could increase fiscal risks and affect Malaysia’s credit rating given by international rating agencies.
“Therefore, it is prudent for the government to limit the exposure of government guarantees by reorganising the projects according to the priority and repayment capacity of the debt,” Tengku Zafrul said in a parliament written reply dated Nov 25.
As of Sept 30, the total value of government guarantees stood at RM289.8 billion or 20.1% of the country’s GDP, he said.
Tengku Zafrul was responding to a question by Tanjong MP Chow Kon Yeow, who is also the chief minister of Penang, on whether the federal government will provide a government guarantee to Penang for the loan applications to finance the state’s LRT project.
In November last year, Chow said the state government will form a special purpose vehicle (SPV) to issue bonds to raise funds to pay for the project.
At the time, he said then prime minister Tun Dr Mahathir Mohamad had assured that Putrajaya will provide a sovereign guarantee for bonds issued through the state’s SPV, to raise money for the LRT project under the RM46 billion Penang Transport Master Plan (PTMP).
Chow added that Penang would not have been able to raise enough in the bonds market, without Putrajaya’s guarantee.
Tengku Zafrul, in the written reply, said the finance ministry received a letter from the Asian Development Bank (ADB) dated Jan 25, 2019, with regards to the application by the Penang government to obtain a loan from ADB to finance the LRT project.
He said that according to ADB’s financing terms, the loan will be charged at a higher repayment rate and cost of financing, as the bank places Malaysia as an upper middle income country, which has a higher maturity premium, with a spread of 0-50 bps, compared with 0-20 bps previously.
The minister said if the government agrees to the loan from ADB, the allocation should be provided for, in the annual budget and the rolling plan of the Malaysia Plan.
“The Penang state government needs to re-examine the projects based on priority.
“The prioritised projects should then be submitted for further study by the Economic Planning Unit, Prime Minister’s Department to be considered under the upcoming rolling plan of the Malaysia Plan,” Tengku Zafrul said.
The LRT project, the first of its kind in the state, spans 19 stations across a 22km line linking the city centre of George Town to Bayan Lepas down south. The Bayan Lepas LRT line is said to be one of the priority projects to be delivered under PTMP.
Source: EdgeProp.my
Does that mean Penang can say sayonara to all the development projects planned in the state ?
God bless you Penang !
Political excuse lah, other mega projects can continue but Penang cannot. We should stop paying income tax to the federal government, all income from Penang should be kept for developing Penang only
political revenge la..
Penang always got sidelined when state government not align with federal government..
aduh..
itu LRT macam on liao
now sideline, apa gomen mau dgn penang?
This IJM is marketing it’s properties at the Light with LRT in the artist illustration, so how now???? Those already signed sNp lan lan already lor, for those who haven’t but interested, hang on. IJM will give 30% discount soon!!
Somehow there are people damn happy now !
F…..
political revenge la..
East Coast Rail Link or ECRL take RM48.85 billion vs Penang PTMP only Rm2.04
billion
Let our CM alone voice out to federal foresee will fail, as he is always too weak in negotiating.
He should find way to gather all Penang people and voice out to Putrajaya.
Recently we can see many projects in Penang had been cancelled due to political reason, eg airport extension, Penang hill cable car and now LRT and more to come.
ok case closed…..LRT development tapao again for Penangites……..sure some powerful NGO fellas feel happy now.
come on people, you all really think we can do the LRT thing based on the state gov performance. it all has been all talk no action, one big show.
at least the fed gov is honest abt and not putting up a side show to continue project a false hope.
i seriously urge our state gov to get their feet on a firm ground and do something which is within their capabaility like improving current road condiiton, frequent feeder bus, more bus route, serving to the high traffic fiz areas.
@jon
I strongly agree with you. I hope the state gov has not spent too much on the “feasibility studies” of LRT, if you know what I mean. hehehe.
What you say may be correct for short term solutions only. We need to be more far-sighted. LRT is no longer a luxury but towards the basic needs for a developing city. We need to improve the short term and also long term planning. Penang state gov not even asking for the actual money but merely asking the federal gov to guarantee the loan while the state work on the fundraising and project implementation which unfortunately turned down by the federal gov. Both federal and state gov had failed to people of Penang. We are fed up and piss off with politics.
I think BN government has done more for Penang. What PH goverment done is just overcrowd Penang island with condos and make the traffic worse.
Go to AIIB and see ?
It’s quite expected to have an uphill battle with the federal gov to implement mega projects, nothing new. I’m not a fan of BN/PN, but politics aside, I don’t see the state gov putting any practical effort into easing current traffic at least as a temporary measure. One of the few problems Penang facing is poorly design city roads, slapping traffic light into every big and small junctions without traffic sensors (how many times i have to stuck in red light for a full 3 mins on an empty junction), lack of underpass/flyover/bypasses, roadside stalls clogging up the street, yellow line parking. I’m sure these are all well within the state gov’s authority and yet nothing is being done to at least ease Penangites’ life for the time being.
@cky
Traffic sensor? Who care?
They are busy in installing car park sensors on every parking lots to ensure every driver pay parking fees.
@chowkonyeow
well said. exactly the point. instead of playing the victim mentality and blaming the fed.
i really see nothing is done from the state vicinity of power and influence for the goods of penang public transportation.
just go to the internet and you can easily find similar LRT topic being stirred year over year at least for the past 10 years. same dish being fried over and over again. all being said that project will kick off soon.? well at least this time around is a little bit different, they get to blame the Fed, easy scapegoat.
@Ranee
I dont think the censors are for the purpose of ensuring parking payments. When you use epayment, it does not require the info of specific parking lot ID to be keyed in. So no knows who’s parking where and payment is made for which specific lot.
I do have the impression that the sensors are for helping drivers find vacant lots, which, unfortunately doesnt work, as the system cant tell you whether there is a car approaching to take the spot or not. And by the time you get there, normally the spot would have already been taken by someone else.
In short, it seems the only purpose of the sensors is to enrich crony contractors doing the sensor installations.
@jon
what a punk
@jon
Idk but playing victim might be just part of their political game. I mean they are now saying the LRT project will continue through other funding options. Might as well have started with their alternatives at the first place, why bother going through Fed which they know will not happen? KL MRT took 7 years to build, at this rate, Penang will never have LRT even until 2030.
In the meantime. state gov should have a backup plan and work on the interim measures which are within their capability and affordability. No point of waiting durian to runtuh from sky la.
penangites have been waiting for the past 10 years. got see a few drawings and artist impressions but most of works are feasibilities studies and survey here and there.
LRT feasibility study for 10 years, meanwhile we provide cycling path from town to bayan lepas phase 4. progress mah.