September 28, 2022

Penang mulling bond issuance to finance RM10bil LRT project

1 min read

GEORGE TOWN: The state government is discussing with a consortium of banks on the possibility of issuing bonds to finance RM10bil Light Rail Transit (LRT) system.

Chief Minister Chow Kon Yeow said Prime Minister Tun Dr Mahathir Mohamad floated this idea in a reply to the state when it requested Federal funding for the project.

“The Prime Minister suggested that a state owned Special Purpose Vehicle (SPV) be created for the issuance of the bonds to be guaranteed by the federal government.

“However, we will still request funding for the project from the federal government under the 12th Malaysia Plan,” said Chow in reply to Jason Ong (PH-Kebun Bunga) at the state assembly on whether the state would go ahead with the Penang South Reclamation (PSR) since they had requested the RM10bil from the federal government.

The state has embarked on the controversial PSR model to finance the RM46bil Penang Transport Master Plan (PTMP), of which LRT is a component.

“While a guarantee by the federal government for the bond is good, we still have to pay for it; as such, a grant from Putrajaya would be a better way to finance the LRT,” Chow said.

The state received the federal nod for the 30km LRT project in July, albeit 30 conditions need to be fulfilled.

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