Transport Minister Anthony Loke Siew Fook on Monday insisted that the Penang Light Rail Transit (LRT) Project will be fully funded through the Federal government’s development budget with a cost ceiling of between RM16 billion and RM17 billion, thus rejecting the public-private partnership (PPP) method.
He said the decision was made after several other rail projects were almost completed, giving his ministry room to channel development allocations to cover the mega costs.
Speaking at a question and answer session at the Dewan Rakyat, direct financing is better for the government in the long run because the PPP model still requires the government to make repayments and bear liabilities in the future.
The government has set the project’s cost ceiling at around RM16.8 billion, but that figure is not the final target, instead an open tender process will be used to reduce the cost.
So far, the first package awarded to the SRS Consortium has been revised through value management, reducing the cost from RM8.3 billion to RM7.98 billion.
The second package involves systems and trains, while the third package involves a cross-sea bridge from Macallum to Butterworth, will be offered through open tender.
The first phase of the project will cover a 24-kilometre line from Komtar to Island A with 19 stations, while the entire 29.5-kilometre Mutiara Line is expected to be completed by 2031.
This move indicates that the government is prepared to bear the huge cost to make Penang's strategic infrastructure projects a success without relying on private funds.
