'Penang govt will give no traffic volume guarantee for undersea tunnel project'

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KUALA LUMPUR (Feb 12): The Penang government would not be liable for any loss that might be incurred by the RM4 billion undersea tunnel concessionaire if there is a drop in revenue, profit or traffic volume, according to the state government's works, utilities and committees chairman Lim Hock Seng.

“The state government does not give any traffic volume guarantee like the federal government. If there is any drop in revenue, profit or traffic volume, the government shall not be liable for any loss that may be incurred by the company due to lack of use of the third link. Also, the 30-year concession period shall not be extended.

“This is in contrast with the first [Penang] bridge where the concession period was extended by the Federal Government,” Lim said in a statement today.

Lim was responding to Works Minister Datuk Seri Fadillah Yusof, who had highlighed four concerns regarding the tunnel project, according to a report in a local daily earlier today.

Fadillah claimed that the undersea tunnel's 30-year toll concession, at a similar rate to the Sultan Abdul Halim Mu’adzam Shah Bridge (the second bridge), would make it among the most lopsided toll concessions in the country.

Fadillah said it was unlike the standard concession agreements where the toll concession company funds the construction cost, collects toll to repay its loans and sees a profit.

In response, Lim said 6.3km-tunnel concession is not a conventional model because the federal government is not providing the funding for the project.

“Instead, the project is being funded via the earmarked land swapping deal,” he said, adding that the land is set at a future value made by the Valuation and Property Services Department (JPPH).

Lim said the state has no other financial resources except the land-swap funding model to undertake the people-oriented project.

“Typically, such a mega project requires the involvement and funding of the federal government. The financial model is in accordance to the model adopted by the federal government and the previous state government for several projects that were planned or implemented, such as the Jelutong Expressway, Butterworth Outer Ring Road (BORR) and the Penang Outer Ring Road (PORR), which was aborted,” he said.

The undersea tunnel is part of the Penang government's RM6.3 billion integrated infrastructure project. The project includes a 4.2km bypass from Gurney Drive to Lebuhraya Tun Dr Lim Chong Eu, a 4.6km bypass between Lebuhraya Tun Dr Lim Chong Eu and Bandar Baru Air Itam, and a 12km paired-road from Jalan Tanjung Bungah to Teluk Bahang.

The project, which has been awarded to Consortium Zenith Sdn Bhd via an open tender, which has become a subject of controversy recently due to the RM305 million cost of the tunnel’s feasibility studies, is currently being investigated by the Malaysian Anti-Corruption Commission.

Meanwhile, Fadillah also questioned the need for the tunnel project after Prime Minister Datuk Seri Najib Razak blogged regarding its redundancy as two bridges connecting the island and the mainland already existed.

To this, Lim said the utilisation rates Fadillah revealed for the first and second Penang bridges — at 87% and 50%, respectively — is not reflective of the on-site situation currently. Lim said traffic is almost at a standstill during the peak hours on the first bridge.

“The traffic demand for the first bridge was even projected by Jambatan Kedua Sdn Bhd in 2001 to reach up to 163,400 vehicle per day by 2020 in comparison to the maximum capacity of 155,000 vehicle per day even upon widening,” he said.

Lim also noted that the second link was constructed to divert approximately 20% of the traffic from the first bridge and promote socio-economic development in the south that would provide a balanced development across the state.

“Hence, this does not resolve the congestion issue and the tunnel is required to be explored further as part of an efficient traffic dispersal network,” he added.