He said the Penang state government has fixed the value of prime land in the state at 2013 prices for a project that may well be delayed by up to 12 years.
The Penang undersea tunnel and road project is to be funded by the Penang government through payment in kind, that is in the form of 110 acres of prime beachfront property, which had been valued at RM6.3 billion in 2013.
“As prime Penang beachfront property, the land is a fast-appreciating asset.
“This could mean the 110 acres would be worth double or triple it’s price by 2025, he told reporters here today.
The whole project consists of a 4.2km bypass from Gurney Drive to Lebuhraya Tun Dr. Lim Chong Eu, a 4.6km bypass between Lebuhraya Tun Dr. Lim Chong Eu and Bandar Baru Air Itam, a 12km paired-road from Jalan Tanjung Bungah to Teluk Bahang and the 6.5km Penang-Butterworth undersea tunnel.
Rahman also question Penang Chief Minister Lim Guan Eng’s decision to pay a staggering RM305 million for paper work carried out for the major infrastructure project.
“RM305 million for what is essentially just paper work.
“It is almost double the RM176 million that the Penang government had used from 2009 to 2015 for the Emas Welfare Programmes for senior citizens, single mothers, and others,” Rahman said.
“In addition, the necessity of the project remains doubtful when traffic along the second Penang bridge is still relatively low,” he added.
Rahman also questioned if the project feasibility study was made via open tender.
“Why was the initial feasibility study awarded to a related party who did not appoint necessary consultants and expertise to complete the job.”
Rahman was referring to the Penang government awarding the project to Consortium Zenith BUCG which he claims was the same company that will be constructing the tunnel.
“It seems the Penang government has no understanding of the term ‘conflict of interest’,” he said.
Rahman, who is also Urban Wellbeing, Housing and Local Government Minister, said the first sub-contractor engaged by Zenith BUCG in 2013 to do the feasibility study was Astral Supreme Construction Sdn Bhd, who in August 2014 had admitted that it failed to complete the report.
Further checks at the Registrar of Companies revealed that the controlling shareholder of Astral Supreme is also a substantial shareholder of Zenith BUCG, Rahman said.
“This is another conflict of interest.”
He also questioned the reason for the state government paying Zenith an advance of RM139 million for the studies that were not completed yet.
“If the feasibility study is unfavourable can the Penang government recover the money.”
Rahman said he has now been informed that the completion of the feasibility study has been delayed several times.
“There are now media reports suggesting the entire project can only be completed, at the earliest, by 2025.”
He said a Bursa Malaysia filing by Ewein Berhad on March 31, 2015 suggests the Penang government made the first payment on February 17, 2015.
“From the Bursa disclosure, Ewein’s joint venture company had purchased this land from Zenith BUCG and this also includes the purchase of two other plots of prime seaside land near Gurney Drive.
“These three agreements in total amounts to a purchase value of RM3.14 billion of land from Zenith that Penang has already given or will give as payment for the project, although feasibility studies have yet to be completed.”
“In addition to fully funding the entire project with the prime land given, the Penang government will also grant Zenith a 30-year concession to collect toll for the tunnel.
“This is a huge departure from a standard concession agreement practice where the concession company would fund the project and collect toll to recover its cost, he said.
“And are not toll roads against the Pakatan manifesto,” Rahman asked.
He said he will wait for a response from the Penang government before considering any further action.