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KUALA LUMPUR: The government has not made a decision on the withdrawal of the US $ 500 million (RM2.037b) sovereign guarantee loan from the Asian Development Bank (ADB) to the Penang government, Finance Minister Senator Tengku said today Zafrul Tengku Abdul Aziz al Dewan Rakyat. .
He said the loan application was made by the Penang state government to partly finance its RM9.5 billion Light Rail Transit (LRT) project.
He said the federal government did not withdraw the guarantee because there is currently none.
However, he added that it does not mean that the project has been scrapped.
“The matter will be discussed with the Economic Planning Unit. Financing is important since the project is very expensive, ”he said.
Zafrul said the government had received a request letter from the Penang state government on January 25 last year to finance the railway project.
He said there were three options: direct loan to the state government with sovereign guarantee, direct loan to the federal government and loan to a special purpose vehicle with sovereign guarantee.
He said that discussions from the previous government of Pakatan Harapan on July 17 last year and the ADB was going to conduct due diligence, followed by a letter from then-Finance Minister Lim Guan Eng stating that it did not there are objections.
He said the letter has no legal obligation and is not legally binding.
“It was decided on July 19 last year that the state government could not apply for a loan without prior approval from the federal government.”
He said the federal government has yet to receive ADB’s due diligence report.
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