Penang Chief Minister Lim Guan Eng has ticked off NGOs for unthinkingly demanding that the state government acts against developers of certain projects, without considering the consequences.

As a case in point, he revealed that the state could suffer a loss of RM60 million in compensation payment to a company which has agreed to comply with the Unesco guidelines on world heritage.

Lim said Boustead Holdings Bhd wants the sum in return for agreeing to reduce the height of its soon-to-be-constructed Royale Bintang Hotel, from 12 storeys to five.

NONE “Are you surprised? We are not even cancelling the project, it is just a reduction of height and they are claiming RM60 million from the Penang Municipal Council,” Lim told a press conference at his office today.

“They (NGOs) just say ‘cancel projects’ but do not realise the financial consequences of their demands, because those who do not need to pay can say anything they like,” he said.

Lim was clarifying why the state is not able to withdraw or cancel certain projects based on NGO demands.

“They (NGOs) can criticise me for anything, but I will not be criticised for making the state bankrupt. Please understand why it is so difficult (to cancel the previous projects), sometimes we are forced to swallow the contracts made in the past,” he said.

“Please do not ask me why, ask the previous government. They are not paying the consequences -  we are, which is why it is so difficult.”

Negotiations underway

Boustead is one of four companies which had received approval from the municipal council to build hotels in heritage zones before these were placed on the World Heritage List in 2008.

The state is still negotiating the quantum and form of compensation to Boustead. The company has alternatively asked for land in Penang, a proposal raised at its recent EGM in Kuala Lumpur.

penang world heritage town 140708 01 The RM140 million hotel is to be constructed behind the general post office in Lebuh Downing.

However, the deal hit a snag in November 2008 when the Penang government pointed out that the proposed structure is too high.

The company then agreed to alter the construction plan to comply with Unesco guidelines on world heritage, which recommends that buildings in a heritage zone should be less than five storeys in height.