(© Bask Oner)
THE DAP Ops Restore (Restructure Toll Rates and Equity) Team would like to congratulate the works minister for declassifying most of the highway toll concession agreements. We also congratulate him for following up by removing two toll plazas at the New Pantai Expressway (NPE) and the Sungei Besi Highway in the past two weeks.
We call upon the works minister to declare the compensation promised to these concessionaires for the abolition of the toll. If the compensation involved is equivalent to the toll that would have been collected, then the joy for Malaysians would be short-lived.
In addition, and more importantly, the DAP Ops Restore Team calls upon both the works and finance ministers to make the entire North-South Highway and its related concessions — the Elite, Butterworth-Kulim (BKE) and the Second Link highways —under PLUS Expressways Berhad completely toll-free by 2016.
Our team has consulted with legal experts, investment bankers and the general public. We have thus developed a comprehensive, practisable and creative programme to return the highways to the people at the least possible cost and shortest possible time without compromising the integrity of the financial markets.
These are our calls to the Malaysian government:
Make a General Offer (GO) to acquire all minority shareholders of PLUS with a generous 15% premium at RM3.30 per share, costing RM5.25 billion, thus ensuring that minority shareholders are protected.
The cost of acquisition, added to the RM8.5 billion net debt of PLUS, will amount to RM13.75 billion.
This cost will be funded by issuing Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. Total repayment will amount to RM16.2 billion over six years.
At the same time, PLUS should generate at least RM20 billion in net positive cash flow in the six years leading up to 2015 without further toll-rate hikes and a conservative 3% per annum traffic growth.
Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion in excess, which could be used to build a better public transportation system throughout the country.
Our proposal will:
- impose no further increase in North-South Highway toll rates. For example, a return KL-Penang journey will remain at RM86.60 today instead of RM115.30 in 2015 and RM168.80 by 2030;
- create RM14 billion savings for Malaysians from 2009-2015. This will be the amount saved either (i) by Malaysians using the highway because of no further toll-rate increases; or (ii) in terms of compensation, which would have to be paid by the government to PLUS Expressways;
- mean that toll payments continue to be collected only until 2015;
- incur no additional cost for the Malaysian government or Malaysian taxpayers.
Not only will the execution of the above proposal bring joy to all Malaysians with a toll-free North South Expressway, the exercise will fit perfectly with the upcoming “mini-budget” by the finance minister:
- the RM14 billion saved by Malaysian consumers will reduce the cost of living for average Malaysians in times of present economic difficulties;
- the RM14 billion saved will also redirect expenditure to other more productive sectors of our economy by increasing domestic consumer demand;
- the reduced toll rates and their subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiency, and ultimately make Malaysian companies more globally competitive;
- best of all, the plan will stimulate demand and make available substantial funds for public infrastructure development without the government having to increase the precarious budget deficit further.
The DAP Ops Restore Team reiterates our call to both the finance and works ministers to include our suggestions in the proposed mini-budget to be announced by the finance minister on 10 March 2009. We trust our suggestions will benefit the government and all Malaysians.
PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24 Feb 2009)
- The government of Malaysia, via Khazanah Nasional Berhad, owns 65% of PLUS.
- PLUS has outstanding net debts amounting to RM8.5 billion.
Economic advisor to secretary-general
Democratic Action Party
25 Feb 2009