COMMENT I refer to the press statement dated May 12, 2016 in reply to me by the Penang executive councillor (exco) Lim Hock Seng on issues related to the RM6.34 billion Penang tunnel mega-project awarded by the DAP-led Penang government to Consortium Zenith BUCG (CZBUCG).

I have waited a week to issue this statement as I wanted to wait for the questions to be raised by the PKR and DAP assemblyperson in the Penang state assembly session, and for the Penang government to provide answers.

To my disappointment, the questions asked were neither hard-hitting nor specific enough.

On the same note, the answers given by the Penang government seemed unclear and, at times, evasive.

I note that this is the second time in a row that the Chief Minister has decided not to answer me directly – preferring, instead, to having his exco provide a suitable response.

Although I had expected an answer from a specific YB Lim, the other YB Lim had replied instead.

Certainly an issue as important as this would warrant a response from the Chief Minister himself.

I appreciate the Penang government's invitation to visit Komtar to view the relevant papers.

However, this invitation would serve very little purpose under the circumstances.

Very little will be achieved by showing the papers just to me alone.

He should instead offer the same invitation to others, especially those who are based in Penang.

Among others, C4, an anti-corruption group; Chant and CAP - both Penang-based NGOs - at least two DAP state assemblypersons and 5 PKR assemblypersons have also raised questions about this tunnel project.

To date, none of them have received a satisfactory replies of any kind.

The heated exchanges in the Penang state assembly last week, where it was revealed that the state Public Accounts Committee (PAC) report on the Penang Tunnel project has been twice delayed, is evidence that proper answers are still wanting.

Perhaps, it would be better to voluntarily make public all the relevant documents in their entirety.

This would of course involve declassifying the exco minutes - including the justification for the award - available for public consumption.

This way we can let the public decide.

I also note that the latest statement by Lim Hock Seng seems to be just a bare denial peppered with numerous attempts to divert from my very specific core questions.

For example, instead of directly answering my very specific questions on the DAP government's first mega-project, Hock Seng choose to question me about unnamed and unrelated federal government projects instead.

Naturally, it would be more on point if the Penang government could focus on answering my questions instead of raising tangential questions about other projects.

I do agree that I have repeated some of my questions. However, I am doing so only because the answers have not been on point.

Here are my latest questions, some of which I am forced to repeat.

Issue 1: Conflict of interest

I would like to stress that, at all times, I have never disputed that the entire project was awarded to CZBUG via open Request for Proposal (RFP) (which includes the 3 studies costing RM305 million).

What I had specifically asked is whether or not there exists a conflict of interest under the circumstances.

Does asking the same company that has been awarded the project to also do the feasibility study that will determine if the very same project is feasible amount to a conflict of interest?

To many, this seems very likely.

I had also specifically asked whether the Penang government, or CZBUCG, had awarded these 3 studies individually via open tender - not the entire project.

Although Hock Seng still insist that the 3 studies were awarded based on an open RFP, but as I had pointed out earlier, Bursa Malaysia filings by Astral Supreme Bhd clearly showed that the feasibility and design studies were awarded by CZBUCG to their own shareholders’ companies.

Does this mean that an open RFP was actually conducted by CZBUCG and that it subsequently awarded the contract to its own shareholders? Can you please clarify on this?

I appreciate your confirmation that the three studies would cost the Penang people RM305 million.

Notably, this figure is twice what the Penang government had spent on various welfare programs between 2008 and 2015.

While the Penang government now says RM305 million is “reasonable”, I leave it to the Penang people to decide if they share the same view.

I am also surprised that the Penang government had not sought the help of the Works Ministry and Public Works Department (JKR) earlier and equally disappointed that they have no plans to seek their help to help reduce the price and ensure project timeliness.

Issue 2: 30-year-told concession for undersea tunnel

A unique toll concession agreement: the DAP government awarding a 30-year concession.

I am surprised at the Penang chief minister's statement yesterday where he said he "regrets that they (critics) criticised the Penang government when BN is the champion of tolls".

I am also disappointed to hear that Guan Eng had tried to divert this issue to the federal government by claiming that the federal government had made it hard for the Penang government to receive approval for a bridge and had to build a costly tunnel instead.

However, the Federal Works Minister Fadillah Yusof had immediately denied Guan Eng's claim and noted there was never any such discussions or application received.

It is clear that the chief minister does not understand what I was actually asking in my two past statements on this subject and chose to brush it off with a general statement of regret and allegations.

To be clear, I had questioned the business model used where, it appears that the Penang government is fully paying for the cost of construction while still allowing the company to collect 30 years tolls.

I had also questioned whether DAP is now no longer against toll.

These are two very different questions. I did not question the fact that there will be tolls collected. Let me clarify further.

Earlier, I had asked why Penang’s DAP government was paying for the full cost of the construction of the Penang tunnel when it had awarded the company a 30-year toll concession.

In its initial response, the Penang government submitted that it had no expertise in maintaining and managing the tunnel.

This is something which is clearly outside the norm.

The accepted standard for toll concession agreements is that the concession-holder has to bear the cost of construction as a condition precedent to collecting toll charges to recover its investment.

I also found it surprising that the agreed toll rate to be applied for to the Penang tunnel will be the same rate as that for the second Penang bridge where the operators had funded their own investment.

The reason given earlier was to "…prevent the bridge operator from experiencing losses".

This is akin to the Penang government saying that alternative toll-free roads funded by the government that exist alongside any private toll roads should not be free and that the alternative government roads, too, must apply the same toll rates.

Otherwise, the private toll operator would incur losses.

After I had pressed further, the Penang government changed its story in their second statement.

It is now saying that the tunnel concession company does not only maintain and operate the toll but is apparently also funding the construction - completely different from their first statement.

The Penang government needs to be clear on this and explain which one of their two differing answers is the correct one.

Is the Penang government funding the construction cost of the tunnel or is it not?

As for the tunnel operator having to bear the cost of this construction, we shall revisit this in my next point.

I note that Guan Eng has ignored my direct question twice in a row.

Has DAP discarded their stance in their previous manifesto and is now no longer against toll roads? If yes, the public has a right to know.

Issue 3: True cost of the project

Inability to answer as to what is the true projected cost of this mega-project once it has been completed.

The 110 acres that the Penang government had set aside for payment to CZBUCG (for the construction cost) is prime seafront land near Gurney Drive which is expected to appreciate strongly in future.

On both occasions when I raised the issue earlier, the Penang government had omitted to include the evidence on the land’s actual market value.

Instead, it continued to repeat the Valuation and Property Services Department (JPPH) valuation of RM475 per square foot in 2014.

However, In 2013 when the project was awarded by the Penang government, the market value for this land was already in the range of between RM840 psf to RM1,300 psf.

This was clearly stated in the three separate agreements submitted to Bursa Malaysia by Ewein Bhd which I had pointed out earlier that shows that CZBUCG had already signed agreements to sell some 60 acres (out of this 110 acres of land) for a total of RM3.14 billion - definite proof that the market value is much higher than the RM475 psf figure given by the Penang government.

For avoidance of doubt, please allow me to restate the question: What is the market value - not the JPPH value - of the 110 acres land now?

If indeed the market value is as high as RM1,300 psf – thus, the value the 110 acres would be RM6.3 billion today.

Given the strong appreciation of prime seafront land in Penang, what would the price of this 110 acres of land be in the year 2025 when the tunnel project is expected to be fully completed?

Doesn’t this arrangement regarding the 110 acre of land also confirm that the Penang government is actually paying for the full construction cost the project?

The Penang government could even up paying more than the full cost due to the land appreciation factor.

Could this end up costing the Penang people as much as RM15 billion or even RM20 billion?

The people of Penang can only know this if they take into account the actual market price of the land in question.

Of course, this does not even take into consideration the additional 30-year toll concession that the Penang people will still have to pay.

Wouldn't it be more prudent for the Penang government if it were to sell off the land at different stages of the construction (in accordance to the progress payment of the project cost) instead of paying the full amount using an appreciating asset and foregoing any land appreciation upside in favour of the private company?

I hope that the Penang government no longer accuses me of recycling questions or asking them without basis.

I trust have shown full evidence and have clearly explained my basis.

I would very appreciate if the chief minister himself, or the Penang government could possibly provide me with straight forward answers to my straight forward questions.

ABDUL RAHMAN DAHLAN is the Urban Wellbeing, Housing and Local Government Minister and also BN's strategic communication director.