Press Statement By Penang Chief Minister Lim Guan Eng In Komtar, George Town On 16 March 2018.
My wife, Betty Chew, a lawyer, wondered aloud how MCA Deputy President Wee Ka Siong can spin a RM6.3 billion public infrastructure project consisting of 3 highways and an undersea tunnel(the project) to suddenly cost RM20 billion. As a lawyer, she states that once you sign an agreement for the contracted price of RM6.3 billion, there is no way you can legally compel the state government to instead pay RM20.54 billion.
This is simple logic for anyone but Wee Ka Siong. Wee is lying again but this time he is making a RM20.54 billion lie to hide his cowardly failure to name which Penang state government leader had corruptly accepted millions of ringgit for this project. His refusal contrasts with Pakatan leaders boldly naming the corrupt leader behind the 1MDB financial scandal that has turned Malaysia into a global kleptocracy. If Pakatan dares to do so, why is Wee scared to do so. Or is Wee afraid of being sued because he knows he is lying and has no proof?
Wee lies like breathing air. He continues to recycle his lie that this project was improperly granted without fulfilling the minimum paid-up capital requirement of RM381 million. Wee did not mention names, but Wee is clearly making a baseless and unfair attack on the integrity of the Penang state secretary Dato Seri Farizan Darus, who heads the Penang Tender Committee that awarded the open tender to Zenith Consortium.
Even the Malaysian Anti-Corruption Commission(MACC) that has unjustly hounded the Penang state government over this non-existent scandal, does not question the fact that the minimum capital requirement of RM381 million was fulfilled by Zenith Consortium. Wee has failed to show proof that the RM381 million minimum paid-up capital requirement was not met, just as he failed to show proof which state government leader accepted corruption money.
I know that Wee Ka Siong is under pressure from UMNO forcing MCA to surrender Bandar Tun Razak parliamentary seat and unable to force Alor Gajah BN to accept Prime Minister’s chosen candidate and Political Secretary Wong Nai Chee to replace the incumbent Koh Nai Kwong. MCA is also unable to get back the Kuantan parliamentary seat promised by UMNO when MCA ‘loaned’ it to UMNO in 2013 general election. Wee is also humiliated that I have refused to debate him because he is not No. 1 in MCA but only No. 2. However this UMNO pressure and personal humiliation should not have pushed Wee over the edge to say that the project cost RM20.54 billion. Wee again ignores the fact that this project was conducted by open tender at a price of RM6.3 billion.
Insulating Against Rising Construction Costs.
Wee claims that the tunnel is not needed because there is still 50% available capacity for the Second Bridge. This 50% available capacity is for now. In 10 years time, the available capacity will be zero and filled instead with traffic congestion. The recent accidents on the Penang First Bridge causing severe jams is a reminder how vital a third link or tunnel is sorely needed. That is the reason the state government is planning ahead to build the tunnel by 2027.
To insulate against rising building and construction costs in 10 years, the state government has locked in the costs at present prices. As the state government has no cash, we have choice but to finance the project through a land swap. The state government also seeks to maximize our land value, by assessing it not at current value when the agreement was signed in 2013. Instead it is to be assessed at a possible future value of RM1,300 per sq feet in 2023, when construction of the tunnel commences.
Land Swapped At 2023 Future Value And No Traffic Volume Guarantees For Toll Concession.
Wee admits that the future land value of RM1,300 per sq feet for the land is high. In fact it is three times the estimated land value in 2013 of RM475 per sq feet. At the same time, Zenith has to source financing and pay the substantial interest cost.
That is why the toll concession is only for the tunnel(the other 3 highways are toll-free) and was made available to provide some opportunity for profit, or else no one would enter a bid for the contract. However, the state government refuses to provide a traffic volume guarantee in the toll concession to Zenith. No monetary compensation is needed to be paid to Zenith if traffic volume is low and does not meet their break-even operating costs. Traffic volume guarantees is a common feature in BN concession agreements to maximize profits for their cronies.
In other words, all risks are borne by Zenith, namely:-
· Paying the interest cost of sourcing loan financing;
· No traffic volume or profit guarantees,
· Zenith bear the risks of rising constructon costs and any drop in land values; and
· Even if there is any rise in land values by 2023, Zenith is unable to enjoy the benefits of any rise in land values when it is computed at a high 2023 future value.
Mad To Talk About RM20.54 Billion Cost When Contract Signed For RM6.3 Billion
It is dishonest of Wee to talk about Zenith benefting from rising land values but not talk about Zenith having to pay for rising construction costs in 10 years time. It is also dishonest for Wee to add in other road works, merely to make up the numbers for his fictitious RM20.54 billion, when these other roads such as the Pan Island Link has no bearing nor connection to this project. It does not make sense. There is no RM20.54 billion cost to Penang. The state government only signed for RM6.3 billion!
There is an old Greek saying that “Those whom the gods wish to destroy, they first make mad.”
Wee Ka Siong, better to remain a coward.
A coward is a better fate than being a political lunatic.
LIM GUAN ENG