Transport minister Loke Siew Fook says the Penang LRT will be paid for from the federal development budget, not via a public-private partnership, as the government now has the means to pay for it upfront.
Speaking in Parliament today, Loke said the shift in funding was possible because other rail jobs under his ministry were nearing completion, freeing space in the books.
“We now have room in the development budget as other transport works under the ministry that use development expenditure (DE) are near completion,” he said in response to a question by Radzi Jidin (PN-Putrajaya).
Loke said the funds for the LRT project will now be allocated through the yearly DE budget.
“Funding through the DE budget is more direct and better for the government in the long run,” he said.
He said this also keeps future burdens on the government down and avoids adding debt or liabilities later.
Loke also said public-private partnerships do not mean the government does not pay, as the private sector pays first and the government pays later.
He said the project has a cost ceiling of between RM16 and RM17 billion set by the government. Adding that it is now “around RM16.8 billion”, he said the cap is “not a target for bidders”.
“We should not put one figure out there. We want to push the price down through open tender,” he said.
Loke said the first package of works, given to SRS Consortium, had been cut down to about RM7.98 billion after a round of “value management” that tested design choices and scope.
“After value management, it went down from RM8.3 billion to RM7.98 billion,” he said.
He said the second and third packages will be offered through open tender, with the government hoping to drive prices lower than the ceiling.
Package two is for systems and rolling stock, while package three is for a cross-straits rail bridge to connect the LRT from a spur line at Macallum to Butterworth.
The first phase of the project covers a 24km stretch from Komtar in George Town to Island A under the Penang South Island project, with 19 stations and supporting works.
The Mutiara Line will span 29.5km overall with 21 stations, linking a reclaimed island near the airport to Komtar, and onward via a cross-channel bridge to Butterworth.
MRT Corp had pegged the full cost at RM13 billion, with completion targeted by 2031.
