The Penang government will set up a special purpose vehicle (SPV) to issue bonds to pay for the state’s light rail transit (LRT) project.

Chief Minister Chow Kon Yeow said the bonds will be guaranteed by the federal government, as proposed by Prime Minister Dr Mahathir Mohamad in a letter dated Oct 15 received by the state government.

“Prior to this, the state government had applied for an allocation of RM10 billion in federal funding to cover part of the Penang Transport Master Plan (PTMP), but the federal government proposed for the state government to set up the SPV to issue bonds with a sovereign guarantee from the federal government,” he told reporters at the Dewan Sri Pinang in George Town yesterday.

Chow said the state government had started discussions with several banks that could help in managing the funds issued through the bonds.

“So far, there are several banks that have come out with proposals on how they can help manage the funds for the project because the project is now entering its final stage,” he said.

In reply to Ong Khan Lee (Harapan-Kebun Bunga) on the matter at the State Assembly sitting earlier yesterday, Chow said that Penang would not have been able to raise enough in the bonds market without a guarantee from the federal government.

Nevertheless, he said the state government would still apply for an allocation under the 12th Malaysia Plan for all projects under the PTMP.

Meanwhile, in reply to Ong’s question whether the state government would continue implementing the Penang South Reclamation (PSR) project, Chow said the project would proceed as it would create opportunities for fishermen and their families to upgrade their living conditions and increase their income.

“The PSR project will also divert the focus of development from the north and northeast areas to the less-developed southern area of the island,” he added.

- Bernama