KUALA LUMPUR — Transport Minister Anthony Loke said today the federal government will continue to “negotiate at arm’s length” to keep the Penang light rail transit project cost as low as possible, even though the state’s chief minister is a DAP colleague.

Loke witnessed the signing of the contract worth RM8.31 billion to SRS Consortium for the first phase of construction here, but said the cost could change in the future after accounting for land acquisition costs.

“The state government must charge us at nominal (price); they cannot charge us at market price. Remember, the federal government is paying for this,” Loke said to questions about land cost estimates.

“I know the state chief minister is from my party but I will still negotiate at arm’s length.”

The federal government will bear the cost to build the 29.5km Mutiara Line after it agreed to take over the project from the Penang administration.

Loke had previously estimated that the Penang LRT could cost anywhere from RM10 billion to RM13 billion.