It’s an unusual payment method

Works Minister Datuk Seri Fadillah Yusof fielding questions from the press after chairing a dialogue on traffic management plan for the Sarawak stretch Pan Borneo Highway project in Kuching.- ZULAZHAR SHEBLEE / THE STAR

PETALING JAYA: The Works Minister has questioned the unusual payment method by the Penang government for the undersea tunnel project.

Datuk Seri Fadillah Yusof (pic) said, given the fast appreciation in value of prime Penang land over the past decade, it was not unreasonable to suggest that the value of land given as payment would have doubled or tripled by the time the construction of the tunnel is complete in 2037.

“The mode of payment of using a pre-determined acreage of prime Penang seaside land based on today’s value could mean that the state government may be overpaying for the construction cost when the tunnel starts construction in the future.

“It is also highly unusual for any government to award a project that will only start construction a decade into the future as traffic and environmental conditions, including land uses may change by then,” Fadillah said in a statement to the media.

He also pointed out that giving the contractor a 30-year toll concession at the same rate of the second Penang Bridge would make it the “most lop-sided” toll concession in the country.

He said the contractor would benefit from both construction profits and the potential appreciation of prime land valued today, in addition to another 30 years of toll collection.

“This is unlike the standard concession agreements in which the toll concession company funds the construction cost of the highway or tunnel and upon completion, collects toll to repay their borrowings and make a profit.

“We are also concerned that the tunnel may not be financially viable, considering the current utilisation rates for the first and second Penang bridge are at 87% and 50%, respectively,” said Fadillah.

Citing the 10.53km north coastal paired roads from Tanjung Bungah to Teluk Bahang, which may cut travelling time by 10 minutes, he said it would be built on environmentally-sensitive steep hill slopes that might lead to bottlenecks, causing further congestion to the surrounding traffic system.

Fadillah also revealed that the state government had sent a letter to his ministry about two years ago, asking for the possibility to build a bridge instead of a tunnel.

“But it has yet to revert to us with supporting documents, including the grossly over-priced RM305mil undersea tunnel’s feasibility studies and detailed design reports, despite repeated requests.

“This leads us to question the sincerity of the Penang government’s request,” he said.

On Friday, Prime Minister Datuk Seri Najib Tun Razak said Penang had no need for an undersea tunnel as there were two bridges connecting the island to the mainland and that it would be a waste of public funds.