Penang Chief Minister Lim Guan Eng showing why the state government needs to take a loan as a bridging finance. — Picture by Opalyn Mok

GEORGE TOWN, May 30 — Penang Chief Minister Lim Guan Eng said today his state government needed to apply for a RM1 billion loan from China as a bridging fund for its proposed Penang South Reclamation (PSR) project.

An irked Lim, who was responding to criticisms by state opposition leaders, even brought out a white board to draw out the plans on why the state needed to take up the loan.

“In order to fund the RM27 billion Penang Transport Master Plan, we will be reclaiming about 4,500 acres of land but there is a funding gap of two years in which we need RM2 billion to cover costs,” he told a news conference here.

He added that this is because they can only start selling the proposed reclaimed lands after the second year of reclamation, which means there is a funding gap of two years.

The Penang lawmaker said the state government will take the RM1 billion loan with lower interest rates from China to pay for half of the bridging finance while the project delivery partner, SRS Consortium, will need to take a loan of RM1 billion on its own and on top of that, pay the RM300 million in interests for the loan.

“So the total bridging finance we need is about RM2.3 billion, including the interests of the loan to be taken by SRS, to cover the two-year funding gap,” he said.

Under the business model submitted by SRS Consortium, the Penang Transport Master Plan (PTMP) projects will be implemented in two phases.

Phase one, from 2016 to 2023, costs RM17 billion and will consist of Bayan Lepas LRT and highway projects.

The PSR project was proposed to fund the whole RM27 billion PTMP and it consisted of reclaiming three islands off the southern coast of the island.

Two of the islands, A and B, will be reclaimed first to fund Phase one of the PTMP.