KUALA LUMPUR (July 2): Malaysia Airports Holdings Bhd (MAHB) says today it has received nod from the ministry of finance (MoF) to immediately proceed with expansion plans in phases for the Penang International Airport (PIA).

"The plans are ready to be submitted by end-July in order to obtain the planning permission from the Penang Island City Council (MBPP), after the project has received the necessary clearance on the plans from the transport ministry, the Malaysian Aviation Commission (Mavcom) and the Department of Lands and Mines as the landowner," MAHB group chief executive officer Raja Azmi Raja Nazuddin said in a statement today.

"MAHB is now in discussion with various parties on the options for investment and funding models," he added.

Once the necessary plans are approved by MBPP, construction is expected to start in the first quarter of 2020.

At the same time, Raja Azmi said MAHB has submitted an application for it to fully fund the project under the proposed Mavcom regulated asset base framework has been submitted and is now waiting for approval.

He noted that the airport operator, for the last two years, has been working on this expansion project, bringing in consultants to draw up the detailed construction plans after the necessary engagement with the transport ministry, Mavcom and the Penang government, including the Penang chief minister.

On June 28, Penang Chief Minister Chow Kon Yeow was quoted as saying that the issue of equity and operation of airports throughout the country had hampered the progress of the PIA expansion.

"The airport is now under the concession of MAHB. How do you give the returns back to private finance initiative (PFI) if you don't surrender the operation of the airport to the PFI company?" he had lamented.

In its second consultation paper released on June 18, Mavcom conceded that there is an urgent need to expand PIA.

"It is currently operating at 120% of the design capacity of 6.5 million passengers per year compared with 7.8 million passengers last year, and this is projected to grow to 9.7 million in 2022," the aviation regulator said, adding that MAHB has commenced plans for expanding the airport to 12 million passengers per year.