GEORGE TOWN – The dispute over Penang’s light rail transit (LRT) loan continues, with Lim Guan Eng saying there was either a misleading parliamentary reply or misreporting by the media, following a clarification by Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz.
Earlier, it was reported that Putrajaya had cancelled its guarantee of a loan with the Asian Development Bank (ADB) for the project.
Tengku Zafrul yesterday told the Dewan Rakyat that the federal government did not withdraw Penang’s loan application, and that there had never been a government guarantee.
In a statement today, ex-finance minister Lim said Pekan MP Datuk Seri Najib Razak lied when he said the former had approved and secured a secret RM2 billion loan guarantee to Penang when he was in the cabinet last year.
“(Tengku) Zafrul said in Parliament that the due diligence report from ADB on the merits of the application for the loan by the Penang government to finance the LRT project has not been presented to the federal government.
“He asserted that the federal government did not withdraw the guarantee as there is currently none, but it does not mean that the project has been scrapped.”
He added that ADB will only provide loans to countries, whether directly or indirectly, through a sovereign loan guarantee, regardless of the merits of the application.
“I would agree that there are other cheaper loans available, but this would be dependent on the willingness of the federal government to provide prior approvals. No financial institution will even consider evaluating a loan unless the green light is given first by the federal government.”
Meanwhile, Penang Chief Minister Chow Kon Yeow, in a statement, said he regrets the Finance Ministry’s stance on the state’s LRT loan.
He said former prime minister Tun Dr Mahathir Mohamad, in a letter dated October 1, 2019, stated that bonds by the Penang government for related projects would be guaranteed by Putrajaya.
“The Penang government, however, will not give up. Instead, it will continue its efforts to implement the LRT project because it has several other financial options to fund projects under the Penang Transport Master Plan.”
He said the state will continue to inject confidence in the federal government to give priority to financing the said project.
“I have also shared this stance and conveyed it to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed at a discussion session on the allocation of the 12th Malaysia Plan to Penang last Thursday in Kuala Lumpur.
“In fact, the same matter and stance were also stated to Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz while attending the Budget 2021: Penang dialogue, organised by the Northern Corridor Implementation Authority on August 8, and the (Malaysia Plan) Preparation Involvement Session 12 with (International Trade and Industry Minister) Datuk Seri Mohamed Azmin Ali on August 2, 2019 in Penang.”
Last Wednesday, Tengku Zafrul, in a parliamentary reply to Chow (PH-Tanjong), said any new loan with a government guarantee should be scrutinised as much as possible because it would increase the government’s contingent liability.
He said the Finance Ministry received a letter from ADB dated January 25 last year regarding Penang’s loan application.
“In line with a review of the country’s GDP (gross domestic product) projections and the government’s focus on economic recovery post-Covid-19, the Finance Ministry has decided to not continue with the ADB loan amounting to US$500 million (RM2 billion) to finance the RM9.5 billion Penang LRT project.” – The Vibes, December 1, 2020
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