GEORGE TOWN: The state government has secured approval for the Environmental Impact Assessment (EIA) report of the Penang South Reclamation (PSR) scheme near Teluk Kumbar.

It is learnt that the Energy, Science, Technology, Environment and Climate Change Ministry has given the green light, paving the way for the three man-made islands totalling 1,800ha to take shape off the southern coast of the island.The report incorporates 23 conditions proposed by the relevant government agencies and non-governmental organisations. It is prepared by project delivery partner SRS Consortium.

Among the key conditions are compensating more than 900 fishermen with low-cost houses in the Bayan Lepas area, planting artificial corals to sustain the marine ecosystem around the islands, and sourcing the sand for the reclamation from legitimate sites.

Sources told The Star that SRS Consortium would start reclaiming the first island measuring 930ha in the first quarter of 2020. It will take about three years to complete the first island. The cost to reclaim is about RM60 per square foot.

SRS Consortium will call for a tender to reclaim the three islands in the third quarter of this year.

Sources said the state government would sell some state land via an open tender exercise, while SRS Consortium will internally generate the seed funds to raise about RM2bil to start the reclamation of the first island.

The reclamation for the second and third island will commence when SRS has raised sufficient funds from the sale of the reclaimed land. For serving as the project delivery partner, SRS Consortium will be paid a 6% fee based on the RM46bil construction cost.

However, the state government is negotiating with SRS to reduce it.More than RM70bil is expected to be raised from the sale of the three man-made islands, enough to spearhead the state’s economic development for the next 30 years.

About 75% of the three islands are for sale via open tender.

Some RM46bil from the targeted revenue will be used for the construction of the RM9bil light rail transit (LRT) line, the RM9.6bil Pan Island Link 1 (PIL 1), and other supporting infrastructure projects under the Penang Transport Master Plan (PTMP).

Presently, the price of industrial land on Penang island is around RM70psf-RM200psf, depen­ding on its status as leasehold or freehold land. However, as the industrial lots on the proposed man-made island are freehold land, the pricing is about RM200psf.

When the reclamation of the islands starts in 2020, there could be a 10% appreciation.

On the three islands – Island A (930ha), Island B (445ha) and Island C (323ha) – the plan is to construct a dam and three power plants for the islands and develop industrial, residential properties and state government administrative buildings.

Chow was earlier quoted as saying that Island A is seen as a conti­n­­­uation and expansion of the Bayan Lepas Free Industrial Zone (FIZ) while Island B will be “a playground for city planners and architects to give their best design” with a tram system and green spaces.

Island C is meant for a mixed development project.