GEORGE TOWN: Penang should go back to the drawing board after failing to obtain a federal government guarantee for a RM2 billion loan to fund its first Light Rail Transit (LRT) project, and look instead for cheaper and proven transport systems, say local activists.
Penang Forum’s Lim Mah Hui said that given the current recession, the entire RM46 billion Penang Transport Master Plan — which includes the LRT, highways and other transport systems – ought to be reviewed.
This comes after Putrajaya said it would not guarantee a US$500 million (RM2 billion) loan offered by the Asian Development Bank (ADB) to the state, citing increased commitments. A defiant Penang government, however, is staying adamant that it would forge ahead even without the loan, by looking at other “financing options”.
Speaking to FMT, Lim said the situation could be a blessing in disguise as the LRT system was fast becoming obsolete as newer, cheaper and faster solutions such as trackless trams were now available.
“The state government should look again at the cost of the PTMP. The LRT will become a white elephant when systems like the trackless trams, or autonomous rail rapid transit (ART) , become the norm.
“The ART costs one-tenth the price of the LRT, and can be set up in a year. That should save the people of Penang from going through massive disruption during the LRT construction, which will take years,” he said.
The ART, seen as a hybrid of a tram and a bus, does not require any tracks or elevated structures and runs on regular rubberised wheels. A three-car set can carry 300 people while five cars can take 500 people, with a tight 15m turning radius.
It has sensors which guides it through any set of roads and allows it to skip traffic lights as it will be given a right of way at intersections. According to Lim, Australian researchers have found that building an ART line would cost about RM25 million per km and if a 20km line was built, it would cost about RM500 million all-in. He said even if the costs swelled to RM1 billion, it was much cheaper than Penang’s plan to build the 30-station, 19km Bayan Lepas LRT which costs about RM8.5 billion.
The Sarawak government plans to build its own ART system in Kuching, with trials likely to start in 2023 and full service two years later.
Economist Lim, who has worked with several international banks,including the ADB, said countries asking for loans from the ADB was “nothing out of the ordinary”.
However, he said Penang would not be eligible for concessional rates usually given to poor countries.
“This is because Malaysia no longer falls in the poor country category. We are an upper-middle-income country. We will be getting a commercial rate, which will be more expensive than concessional loans,” Lim said.
He said that while Penang could claim that it can repay the loans, the state leaders must realise that their optimism was misplaced. LRT systems, he said, would naturally be loss-making ventures, as could be seen from similar projects in the Klang Valley and in other countries.
He said that even if the state were to reclaim land and sell it to the highest bidder, there was no certainty that the reclaimed lands could fetch the right price. Based on these two factors, he said taking such a huge loan for the LRT project was highly risky.
“The LRT is not going to generate cash flow but will lead to a deficit. How is Penang going to pay back the loan? And why was this loan application not made public?”
Finance Minister Tengku Zafrul Aziz told Parliament on Monday that the ADB had given the federal government three options in January.
These were a direct loan to Penang with guarantees by the federal government; a direct loan to the federal government with re-lending to Penang; or a direct loan to a special purpose vehicle with a guarantee from the federal government.
He also said the repayment rate would be higher with a spread of up to 50 basis points.