The property developer told Bursa Malaysia that its indirect subsidiary Tanjung Pinang Development Sdn Bhd (TPD) and the Penang state government inked on Wednesday a supplemental agreement to the 1992 concession agreement.
Under the supplemental agreement, the reclamation works that began in 1997 are required to be completed by Dec 31, 2022.
TPD, which is 78.8% owned by the E&O group and the rest by the Penang Development Corp, had completed the reclamation of 240 acres under phase 1 in 2005 and is now working on reclaiming 760 acres under phase 2.
It was previously reported that the reclamation concession would expire in 2019, and that the reclamation of phase 2 would take three to five years.
Wednesday’s supplemental agreement came a month after Chief Minister Lim Guan Eng said the Penang state government had written to TPD and another developer to get their consent to waive confidentiality clauses on land reclamation agreements made with them.
The STP project, approved back in 1992 by the state government, has seen its reclamation works being abandoned twice before E&O came onboard to revive it in 2003. One reason for the abandonment was the Asian financial crisis.
Another salient term of the supplemental agreement is that a total of 191.13 acres will be reclaimed and surrendered to the Penang government arising from STP Phase 2, which includes 131.09 acres at Persiaran Gurney.
In a Bursa announcement in November 2014, E&O said the planning permission for land reclamation works was conditional on it surrendering 191.09 acres of reclaimed land to the state, of which 110 acres will be the net area of land available for development (made up of 60 acres on the man-made island and 50 acres at Persiaran Gurney).
Another salient term in the latest agreement is that TPD may, after completion of reclamation, apply to convert those parts of the STP Phase 2 reclaimed land that can be alienated under the terms of the National Land Code 1965 (i.e. after providing for the portions to be surrendered to the Government and for various reserves) from land of leasehold to freehold tenure.
Conditional on payment of the requisite premiums and TPD also complying both with the provisions of the code and all conditions imposed by the state authority, the state government would approve the conversion.
E&O shares sank 6 sen on Thursday to close at RM1.38, with 2.032 million shares being traded.