Chief Minister Chow Kon Yeow (PH-Padang Kota) said the bond idea was proposed by Prime Minister Dr Mahathir Mohamad, who had promised to give a government guarantee on it.
He said a special purpose vehicle (SPV) would be formed so that the bonds could be issued.
He said the transport division of the state’s Economic Planning Unit would be seconded to the new SPV to get things started.
“We have started talking to a consortium of banks to fund this, and feel positive it can be carried out,” he said during question time here.
He was responding to Ong Khan Lee (PH-Kebun Bunga) who asked about the status of the RM10 billion applied for by the Penang government to fund the LRT project.
Ong also asked if the state government would continue the three islands reclamation project to pay for the RM46 billion Penang Transport Master Plan (PTMP) if the funding was obtained.
Chow said the project would continue as it is needed to pay for PTMP ventures.
Lee Khai Loon (PH-Machang Bubok) then asked if the scale of reclamation would be cut down once the bonds are issued.
Chow said the original plan for the Penang South Islands (formerly PSR) had to be in place to finance the project.
“This is not a free bond,” he added. “A bond is like a bank loan – someone has to pay for it. The onus is on us to pay for it.
“The financing architecture remains through the creation of islands. This is to pay for the LRT, the Pan Island Link 1 (PIL 1) highway and other costs, including other infrastructure works.”
If the project were federally funded, he said, there would be no need for the state to pay.
He added that he would welcome any plans to include the project under the development expenditure of the works ministry.
The 19-station, 30km Bayan Lepas LRT line is expected to cost RM8.5 billion, while the PIL 1 highway will cost RM7.5 billion.
The LRT project was approved by the Land Public Transport Agency on 30 conditions. It is required to gather public feedback for three months, with the process to end on Nov 19.
The project will be funded through the sale of the three reclaimed islands to the highest bidder.