Lim Mah Hui of Penang Forum, said there was no explanation about how it would pay SRS Consortium after the state government announced that a new joint venture led by SRS would carry out the reclamation as a majority stakeholder while the reclaimed land would be owned by the state.
Chief minister Chow Kon Yeow recently announced the setting up of the joint venture between state-owned Penang Infrastructure Corporation Sdn Bhd (30%) and SRS (70%) which would reclaim half of “Island A” below the Penang airport runway.
SRS is expected to pay RM3.8 billion for the reclamation while the state would not pay anything.
Lim, an economist and former international banker, said the arrangement between the state government and SRS was not transparent and raises many questions.
“What is the role of this JV? Is it only to appoint a contractor to reclaim the island? Does it have any ownership of the reclaimed land? Or is the reclaimed land wholly-owned by the state? Which state agency will be owning it?
“What is the initial authorised and paid-up capital of this JV? Or is it a RM1 company? Will the state contribute to 30% of the paid-up capital?
“It will be strange if the state does not put up a single sen as claimed and yet have 30% ownership (in the JV)? It also sounds strange that the state will have full ownership of the land when it does not put in any capital.
“How is the contractor going to be paid? Is it through the sale of the reclaimed land?
“And if they are paying SRS in kind, through a land swap, what happens if the land is sold below the expected value? How will SRS be paid? Or will the state give a guarantee to make up for the loss? Or does SRS take the loss?
“It is hard to believe that a private company would take all the risks and the state receives the benefits. These and many other questions must be answered.”
Island A is one of three islands mooted by the state government as part of the RM46 billion Penang Transport Master Plan. The other two islands would remain under a project delivery partner model, where the state would pay for it.
The state government resorted to the PDP model after failing to obtain a federal government guarantee for loans to carry out the project and allowed SRS to carry out the project using its own funds.
Sahabat Alam Malaysia (SAM) president Meenakshi Raman said the state government should not be too eager to go ahead with the project, as necessary approvals have yet to be given by the Department of Environment (DoE).
She said those involved in the reclamation project had sent a revised Environmental Impact Assessment (EIA) report in January, which has yet to be approved.
Meenakshi said a fishermen’s unit had filed an appeal against the EIA approval in July 2019 and was awaiting a decision by the three-member panel. It is led by sessions court judge Rozina Ayob, with former DoE director-general Abu Bakar Jaafar and environmental studies academician Ramdzani Abdullah as panel members.
She said the panel was supposed to meet this week, but it was postponed to June 23-25, pending the outcome of the DoE’s decision on the revised EIA sent in January.
“The state government and SRS must wait for all approvals from the DoE. It is not only the environment management plan which is awaiting approval but the revised EIA as well.
The PSR, or three-island project, seeks to reclaim 1,821 hectares of land. The state plans to sell the land to the highest bidder to finance infrastructure projects worth RM46 billion, such as highways and a 30-station LRT line.
The project will be spread over 17 sq km, with islands covering 9.3, 4.45 and 3.23 sq km, to be reclaimed off the coast between Permatang Damar Laut and Gertak Sanggul.