Money woes facing contractors for Paya Terubong road bad sign for Penang, says ex-councillor

The Paya Terubong-Relau road under construction.

PETALING JAYA: A former Penang Island City Council (MBPP) member says the reported financial problems facing the contractors building the Paya Terubong-Relau highway portend trouble for the Penang Transport Master Plan (PTMP).

Lim Mah Hui, from the Penang Forum, who served for six years as an NGO appointee in the council, said this underlined the perils of funding mega projects with uncertain cash flow.

A news report on Tuesday had claimed that the paired road project, linking PayaTerubong to Relau, had hit a snag, with the developers supposed to complete the 2.1km of the remaining stretches of this 4.9km highway running short of cash.

“This project will be further delayed. If the Penang state and local governments are facing so many problems in completing a mere 4.9km of highway, how much confidence should the public have in their ability to build 70km of elevated highways and tunnels under the Penang Transport Master Plan?

“The problems in the PayaTerubong road include collapsed beams, deadly landslides that claimed nine lives arising from poor implementation and monitoring, and now further delays due to financial constraints,” he said in a statement today.

Lim said Chief Minister Chow Kon Yeow had hit the nail on the head when he was quoted as saying: “As building the road will not bring the developers any revenue, they need to time the paired road project with the sales of their project.”

Lim questioned what would happen if the developers were unable to sell in a bad property market?

“For how long will the state and council have to wait then?

“Penang Forum has repeatedly alerted the Penang state government on the financial risks of funding the RM46 billion project with revenue from land reclamation.

“The major risk arises from timing and cash flow. Payments have to be made when project construction starts.

“Will the state be able to reclaim and sell the land in time to fund the payments?

“Is there enough bridge financing to tide over delays in the project? Will the state be able to sell the land at the projected price?

“What happens when there is a shortfall in revenue? Will the project be delayed or abandoned?

“There is nothing worse than starting a huge infrastructural project with severe environmental damage and then delaying or, worse still, abandoning it halfway,” Lim said.

He said the extensive destruction of the hills in PayaTerubong should also be a clear lesson for the state and the council.

He said the Penang state government had consistently sold the idea to the public and the federal government that it does not need any public funding.

“It said it can easily fund the PTMP with land reclamation. It has consistently underplayed the risks of its financial model for funding the PTMP.

“If the chief minister is able to recognise this cash flow problem for a small project costing only RM270 million for the two developers and RM275 million for the MBPP, he should be more forthcoming to the public on the financing risks of the RM46 billion PTMP,” Lim added.