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Yesterday, Penang Barisan Nasional (BN) chairman Teng Chang Yeow said the project could be axed without compensation to the consortium involved as there was a no compensation clause in the agreement signed between the developer and the Penang government. Pix by Shahnaz Fazlie Shahrizal

GEORGE TOWN: The DAP-led state government says the issue of compensation for the Penang Undersea Tunnel project would only arise if it refused to enter into a final construction agreement with the developer.

State Local Government, Traffic Management and Flood Mitigation Committee chairman Chow Kon Yeow said this in response to Penang Barisan Nasional (BN) chairman Teng Chang Yeow’s remark that no compensation was required if the RM6.3 billion project was scrapped in the event that BN came to power in the the state after the 14th General Election (GE14).

Short of saying that the state government had yet to enter the final stage for the agreement, Chow said it would only happen once the developer had complied with requirements and secured approvals from relevant agencies.

“When the consortium complies with all requirements and secure all necessary approvals from relevant agencies, then it is incumbent upon the state government to enter into the final agreement, which is the construction agreement,” he told a press conference today.

“If they have complied with everything, what can the (state) government do? The government has to enter the (construction) agreement. We cannot say we do not want to enter (into the agreement).

“If it (the state government) does not want to enter into the agreement, then the compensation issue will arise.”

On Sunday, Penang BN launched 60 initiatives in its state manifesto. They included the promise to cancel the undersea tunnel project if it regained control of the state in GE14.”

Yesterday, Teng said the project could be axed without compensation to the consortium involved as there was a no compensation clause in the agreement signed between the developer and the Penang government.

Chief Minister Lim Guan Eng said there would be compensation if the project was scrapped.

“I cannot understand where he (Teng) referred to when he said there was no need for compensation if the project was cancelled.

“This is not a MOU (memorandum of understanding) where there is no compensation if it is cancelled...this is a contract,” he said.

The 6km undersea tunnel was designed to link Bagan Ajam in Butterworth to scenic Gurney Drive on the island.

The project was supposed to see the construction of three paired roads which link Gurney Drive, Air Itam and the tourism belt of Batu Ferringhi to the sole highway on the island – the Tun Dr Lim Chong Eu Expressway.

However, it has since come under the Malaysian Anti-Corruption Commission’s (MACC) microscope, following allegations of impropriety over the high cost of the feasibility studies as well as the 24-month delay in completing it.

MACC recently arrested two men, including a 37-year-old Datuk Seri, who was said to have received a staggering sum of money from a construction company linked to the project, after claiming that he would be able to slam the brakes on the investigation.

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