What say you Guan Eng, PH govt never approved LRT loan

PH govt never approved LRT loan, says Zafrul

Finance Minister Tengku Zafrul Aziz said today that no approval had been given by the Pakatan Harapan government to an application by the Penang state government for a RM2 billion foreign loan.

There was no question of the Perikatan Nasional government supposedly withdrawing a guarantee for the loan, which was to finance a proposed LRT project in Penang.

Former finance minister Lim Guan Eng and other DAP politicians have raised a hue and cry over the supposed withdrawal of a guarantee from the federal government for the loan from the Asian Development Bank (ADB).

Tengku Zafrul told the Dewan Rakyat today about the background to the loan while winding down the debate on the finance ministry budget estimates.

He said the federal government received a letter from the ADB on Jan 25 last year setting out three financing options for the LRT project.

These were: a direct loan to Penang with guarantees by the federal government; a direct loan to the federal government with relending to Penang; or a direct loan to a special purpose vehicle with a guarantee from the federal government.

“Further discussions were held between the finance ministry, the Penang state government and ADB on July 17, 2019. It was decided that ADB should carry out due diligence.”

The next day, July 18, the finance minister, then Lim Guan Eng, issued a letter to state that the federal government had no objection to the due diligence being carried out.

Tengku Zafrul said the letter did not bind the federal government by law.

On July 19, the Cabinet decided that the Penang state government could not borrow money without the approval of the federal government, Tengku Zafrul said.

“The finance ministry thus did not receive the due diligence report from ADB. The issue of a guarantee for the ADB loan does not arise as the subject was not approved by the Cabinet,” he added.

Tengku Zafrul rejected an allegation by Lim on Saturday that the federal government was not being sensitive to the development of Penang.

On Nov 27, news reports said Putrajaya had decided not to proceed with the government guarantee on the Penang loan application for the RM9.5 billion LRT project.

Tengku Zafrul was quoted then as saying that the decision was in line with the revised revenue and income projections for the country, as well as the government’s focus on restoring the economy, following the Covid-19 pandemic.

If the federal government proceeded with the loan, the minister said it would increase the federal government’s commitment to operational and development expenditure, as well as other off-budget projects borne by the government, such as the MRT Line 1 and 2 (costing RM71 billion), LRT3 (RM17.7 billion), the Pan Borneo Sarawak Highway (RM13 billion) and the East Coast Rail Link (RM48.85 billion). FMT