I look forward to the Penang Government and the YAB Chief Minister’s reply to this press statement
I take note that the YAB Penang Chief Minister has declined to engage me directly to answer and has relied on his Penang EXCO YB Lim Hock Seng to reply. Nevertheless, I will consider that this is the official reply from the Penang State Govt.
Firstly, thank you for confirming what I had exactly said – that the total cost for the feasibility study, detailed design and environmental impact assessment totals RM305 million, which I consider as mostly paperwork.
Nowhere in my press conference nor in my press statement which you can view on my FaceBook page did I say that the RM305 million is only for the feasibility study alone. Therefore, MalaysiaKini and YB Lim Hock Seng should have been more careful instead of suggesting that my figure for the feasibility study alone is wrong.
It makes for good headlines but it is mischievously wrong and misleading.
Question 1:
Again you have misunderstood me. I did not ask if the ENTIRE RM6.34 billion project was awarded based on open tender but I specifically said if the three studies costing RM305 million were awarded based on open tender.
We are well aware that the entire project was awarded to Consortium Zenith-BUCG Sdn Bhd (CZBUCG).
However, from the Bursa Malaysia announcement of Astral Supreme Bhd dated 15 August 2013, it was stated that the feasibility study and detailed design costing RM270 million was awarded by CZBUCG to a joint-venture between its majority shareholder itself, Zenith Construction with public-listed Astral Supreme Bhd.
More interesting to note is that one particular individual is not only a Director and shareholder of Astral Supreme Bhd but he is also the largest shareholder of Wira Syukur (M) Sdn Bhd, which is a large shareholder of Zenith Construction Sdn Bhd.
One year later Astral Supreme Bhd was terminated and the excuse given was Astral was “unable to find consultants who could undertake the project”.
From this Bursa announcement which suggest that CZBUCG actually awarded the majority of the RM305 million studies to its own share-holders and the fact that the Penang Govt has evaded my direct question of whether these studies were tendered out, would it be fair to say the answer is no?
The Penang Govt also does not seem to have addressed my concern that the same company awarded to construct the project was also responsible to do the studies to determine whether their own project is feasible or environmentally acceptable or not . Is this the case and is this a conflict of interest?
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Question 2:
I take note of the Penang Govt’s admission that the three studies cost 5.54% of the entire construction cost.
However, I question why would the feasibility study for the three related roads be worth RM31 million while that of the more complicated and riskier undersea tunnel is RM20 million.
The total of RM51 million for the feasibility study alone and RM305 million for all three studies are still expensive figures for studies and I take note that the Penang Government has not indicated that it will engage with the Works Ministry who had offered to help them reduce their cost and ensure project timeliness which I highly recommend the Penang Govt to consider.
The Penang Govt also corrected me to say that the total cost paid to date is RM133 million instead of RM139 million. However, the exact figure of RM138,971,572.61 which I quoted in my statement was given by PKR Penang YB Cheah Kah Peng who stated that this figure was in the state PAC report given to him and the 5 dissenting ADUNs where they had expressed that they found it hard to justify this high cost.
Thus the Penang Govt is wrong either way – either in its PAC report or its explanation. Or could it be that YB Cheah quoted the wrong figure?
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Question 3:
Thank you for your confirmation that RM133 million has indeed been paid although all the studies have yet to be completed and that it is based on progress payment.
I take note that the Penang Govt is indeed funding the progress of the work by CZBUCG on the project, which I will revisit later in question 7,
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Question 4:
Again I thank the Penang Govt for confirming that should the feasibility study finds that the project is not feasible, none of the fees already paid can be recovered by the state government.
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Question 5:
The Penang Govt says that there is no delay in the project although they admit the feasibility studies are not fully completed coming up to 3 years, despite the consortium having announced that they would complete the feasibility study by April 2014, despite the fact that one of the original parties awarded to do the feasibility and design studies had to be terminated one year later due to lack of consultants and despite no tangible construction work has started.
I will just have to accept what Penang Govt says is true on this as the project schedule seems to be a well-kept secret that few are aware of – just like the Taman Manggis medical tourism facility that remains an empty land six years later.
Can the Penang Government share with us the original and current project schedule?
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Question 6:
Although it is able to entirely fund the RM6.34 billion construction cost of the project, the Penang Govt now says that it is not able to afford the maintenance of the Penang Tunnel and this is why CZBUCG is allowed to collect 30 years toll.
More worrying is that the Penang Govt now says that the toll charges are to be set at the same rate as the second Penang bridge on the excuse that the Penang govt does not want the operator of the second bridge to suffer losses.
This is an unacceptable excuse for three reasons:
1) The toll rate for the second bridge was fixed on the basis that the operator will collect toll to pay for the maintenance of the bridge and to recoup its investment put in to construct the bridge.
However, the Penang Tunnel operator will be charging the same toll rate even though it does not need to recover their construction cost as the Penang Govt is completely paying for it.
Does the Penang Govt see this crucial difference?
2) Saying that the Penang Govt imposes toll as it does not want the second Penang bridge operator to suffer losses is the same as saying that govt-owned Public Hospitals must charge the same in order to avoid Private Hospitals from suffering loss. Does the Penang Govt find this is a laughable excuse?
3) Imposing toll roads is certainly against Pakatan’s manifesto. Now that the DAP Penang Govt has confirmed a 30 years concession will be given, is DAP prepared to admit that it is no longer against toll highways?
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Question 7:
The Penang govt says that the value of the 110 acres of land it has pre-identified as payment to CZBUCG for the project as at 2014 is only RM475 psf.
However, based on three agreements signed to date by Ewein Bhd to purchase some 60 acres out of the 110 acres of the land compensated or to be compensated to CZBUCG by the state govt for a total of value of RM3.14 billion has revealed differently.
The Bursa announcement on 12 June 2014 shows that the first agreement signed has a valuation report dated 31 Dec 2013 that values the land at RM840 psf.
http://www.bursamalaysia.com/
The second announcement dated 28 December 2015 similarly values the land at RM840 psf.
http://www.bursamalaysia.com/
Whereas the third Bursa announcement for the purchase of 50 acres of this land for a total of RM2.831 billion from CZBUCG dated 15 January 2016 shows the land valued at RM1,300 psf.
http://www.bursamalaysia.com/
Therefore, the valuation of the 110 acres of land at RM475 psf in 2014 given by the Penang State Govt in their explanation is far below the market value as cited by the three Ewein Bhd agreements.
Additionally, the Penang Government and CZBUCG have said that the total effective price of the project will not reach RM20 billion upon completion in 2025 (at the earliest) but did not forecast a specific cost.
Since it is hard for them to answer, perhaps an easier way to ask them would be:
If the price of that 110 acres of land today is between RM845 psf to RM1,300 psf, given the fast appreciation for Penang prime seafront land what do you think the land price would be in the year 2025?
That would give you an idea of the true cost of this project.
The Penang Government had also said that CZBUCG has to bear the cost of the various studies and the construction cost first. It further implies that payment by way of appreciating assets such as prime land is justified.
However, based on your answer to question 3 earlier, is it fair to say that the CZBUCG has been compensated on a timely basis, and based on the three agreements cited, can you confirm if CZBUCG had forward sold the land to Ewein Bhd for some up-front payment?
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These are fair questions that many people in Penang and NGOs have been asking about this project for the past years and I believe it is in the public interest that such concerns and questions is properly addressed.
I look forward to the Penang Government and the YAB Chief Minister’s reply to this press statement.
