Tuesday, January 06, 2009

We Want Our Highways Back!

In the past, our previous Works Minister, Datuk Seri Samy Vellu will brush off suggestions by opposition politicians to take over the highway concessionaires to relieve the burden of the people by saying that it'll cost the government RM100 billion to take over all the highways in the country. It's a ridiculous figure of course, but you know how Samy Vellu is.

Hence we are thankful to the new Works Minister, Datuk Mohd Zin Mohamed for declassifying the majority of the toll concession agreements for public viewing, which will allow us at the same time to study if it's even feasible for the Government to terminate or take over these concessions. (Although I must say, only 5 persons at a time, up to 1 agreement each time for up to 2 hours is a little impractical).

I had the opportunity to have an early look at the agreement for Lebuhraya Damansara-Puchong (LDP) which cuts right across my constituency, a source of complaints and dissatisfaction among my voters in Petaling Jaya, and those in Puchong to Kepong. After all, we have highlighted previously these cases of highway robberies, and the excessive profits which LDP is making.

My comments on my brief visit this morning has been reported widely in the Chinese press (including the Chinese Malaysiakini) and also The Malaysian Insider.

I'll just add here the terms as per the contract on possibility of the Government taking over the concession. Readers who are corporate lawyers would probably be better placed to add further comments:

Under Clause 25.4 on Expropriation:
Notwithstanding any provision in this Agreement, the Government may [exterminate] this Agreement by expropriation of the Concession Company or expropriation of the Concession at any time by giving (3) months written notice to the Concession Company if it considers that such expropriation is in the national interest.

(You bet it is!!)

And in the event of expropriation, the terms of compensation is as follows under 26.3.2:

(a) the amount (if any) by which the Value of the Construciton Works exceeds the aggregate of the amounts paid or the liabilities and obligations assumed by the Government pursuant to Clause 26.1 and all amounts as at the date of compulsory purchase or acquisition owing to the Government by the Concession Company.

(b) an amount equal to:
  1. (i) the amount of interst which would have accrued on the moneys invested in or lent to the Concession Company by shareholders of the Concession Company as if the interest had accrued on such amounts from the relevant dates of payment to the date of payment by the Government on an accural basis of 12%; less

  2. (ii) any net dividends or interest received by the shareholders of the Concession Company
In simple terms, my understanding of the above clauses is that
  1. the Government can at any time terminate and acquire the LDP highway concession

  2. the Government just have to pay for the "Value of Construction Works" which will include capitalised interest costs (which for LDP as declared in their listing prospectus is RM1.327 billion)

  3. the Government will also have to pay interest of 12% to any loan extended by the shareholders of the concession, net of whatever interest or dividends which have already been paid.
The clause looks completely reasonable and given that the LDP concessionaires have to date refused to voluntarily reduce toll rates, the Government should immediately exercise these clauses.

After all, as of 2008, the Government would have already paid toll compensation amounting to RM628 million to date to Litrak, the LDP concessionaire! What's more, the Government will continues to pay RM75 million in compensation yearly til 2016 when the toll rate is scheduled to be increased to RM3.10 (from RM2.10 currently before Government compensation).

Simple mathematics (but we should however, never overestimate the mathematical competence of the BN government) tells you that it's actually cheaper to expropriate the Highway than to continue paying compensation over the next 20 years!! And that doesn't even take into account the fact that besides the compensation received (which is RM0.50 per passing vehicle), the road users still pay an exhorbitant RM1.60 each to sit in the very congested LDP, especially during peak hours!

I've also glimpsed through the above terms for KESAS and Grand Saga highways as well, and they say exactly the same thing! (Will look at more agreements tomorrow)

So please, stop the charade about it being too expensive to take back our highways. It's even more expensive to continue paying compensation to these concessionaires!

19 comments:

Anonymous said...

How much does it cost to maintain the highway? E.g. the resurfacing, painting, side barriers, LDP patrol, etc? Just make sure that all costs are factored into your calculations - the savings may not be all that much. And I have grave doubts on the efficiency of the PWD operating highways (resurfacing to be done only during by-elections??)

ck said...

YB, thanks for the 1st hand update on the high"toll"way! But may be it's good (as an economist) to give rakyat the full analysis i.e. Cost-Benefit Analysis of using rakyat money to take the highways.

Keep it up, YB! God bless!

bla bla bla said...

Only now MCA Youth wants to study the highway toll agreements?

Why was this not done before the agreements were signed more than 10 years ago?

MCA seems to know very little about the toll agreements. Lame excuse may be given that the agreements were classified documents.

Well, did MCA, being the 2nd biggest component party in BN look after the interest of the public and take any action such as questioning the toll agreements before their were implemented as the highway concessionaires affect millions of Malaysian?

Was the people's voice heard? Where was MCA when the people condemned and complained on the high toll rates imposed on the public? Where was MCA and was MCA with the people when Cheras residents protested at Kajang Cheras Highway?

What is the point of supporting them when they can only act like an opposition party and yet less effective than the opposition party?

COME ON LAH!

KoSong Cafe said...

Well done, Tony!

Despite the constraints of limited time provided and your busy schedule, you have done what we have been yearning for, for years. Of course, thanks to the Minister for declassifying which made it possible, but no thanks to his cynical expression on television.

We are looking forward to the mother of all, NSE, which continues to burden us.

Dr. Mahathir's idea of NSE was fantastic but the whole lop-sided arrangement sucks big time. How could we allow people responsible for taxing the majority to benefit some minority continue to rule us?

Let Kuala Terengganu be the next indicator of what is in store for our nation despite their old habits of last minute 'bribing' the electorate and unfair reporting.

Anonymous said...

All contracts signed with the government are lopsided in favor of the contractor. I don't have to explain YB and I think you know the answer.
Take an example the AIROD term of contract with the RMAF for aircraft maintainence, 20% mug up from the price decided by the contractor (imagine they have mug up the price and on top given another 20% mug up contractually)
Anybody can become a millionaire!!.
So that is what happen in the world of privatization. The only way to stop this is to change the government, don't you think so?

Anonymous said...

and us in Sarawak don't even have a proper highway!!! :( sad**

Anonymous said...

if the end result is nothing happened, then the rakyat will continue to suffer.

but if the gov ever going to nationalize LDP, i hope there is an in depth study that not only covers the financial aspect but also long term feasibility like maintenance, improvement, traffic control etc. Money aside, CAN our highly INCOMPETENT public works department handle the maintenance of LDP?

anyhow, even if Gov decides to keep collecting toll on LDP upon nationalization, the toll at the Sunway part should be demolished. it is not only a 'extra burden' to users that do not have other alternative roads to use, but also often the bottleneck of traffic congestion during peak hours.

nextimelah said...

Thank you YB Tony for the insight. I too am one of those people who find RM1.60 LDP toll such a great burden.

Please help us get rid of it! Thank you!

amoker said...

Thanks Tony. I read some statement of such nature in the Star . Thanks for making the time to investigate. Trully a caring MP

Weng-Soon said...

Good job and great news!

Emily Pratt said...

YB Tony,

I remembered DAP hired a brilliant economist/finance wiz-kid (sorry could not remember his name).

What does he say? If he can mathematically compare the NPV or PV between taking back the highway or con't paying the concessionaire and show QED that is is cheaper to take back... I think you have a winning case.

If that is the case raise it up in Parliament with haste.

Thank you sir for looking after the rakyat's pocket.

Emily Pratt

DNAXTION said...

Please bear in mind the Penang Second Bridge contract whether have these so call unfair clauses. As today we can blame the existing highway contract signed by the Government, and the people will also question the same to the PKR rules Penang state.

Don't want to see the same happen to our future hope ruling PKR will repeat the same mistake.

Review the contract now instead of later which will be too late.

Anonymous said...

The holding company, Lingkaran Trans Kota Holdings Berhad, as far as I know, gave promising dividents to its share holders for the past financial years.

Crazy idea: Why not all of us form a consortium, raise fund, buy the holding company, and operate these highways???

The idea is: be one of the substantial shareholders, and own it!

Yow Chuan said...

YB Tony,

If you need donations from the dwellers of PJ to acquire LDP, just give us a tinker. I am sure all of us (residents in PJ) can still fork out some extra money and end this 24/7 robbery once and for all!

Unity is indeed strength!

Anonymous said...

Hi Tony, politically it is fine to make an issue of LDP (which lies across your constituent). Just hope you do not raise the hopes of the rakyat too high on nationalising the highways. Of course, we all want FREEBIES (have the cake and eat it...).

Expropriation/nationalising a government contract will be viewed very negatively by investors (both local and foreign). Wide/serious implications for the Malaysian capital markets - remember the equity/bond holders of Litrak/Gamuda will be hit directly...followed by other privatised entities (Chi Chang can probably give you a better idea).

If DAP need help on financial calculation on concession agreements, just leave a note in the comment (but I am sure Chi Chang is fully capable of working the numbers).

Keep up the good work.

Anonymous said...

digital camera?

- siew eng

Anonymous said...

Typical is it not that our gov can waste RM 4.7 Billion on PKFZ & not have the funds to buy back LDP ??? Make over RM 80 Billion on oil & not afford to buy back LDP ??? Transport Minister & Finance Minister pls explain.

Anonymous said...

In the first place, in any dealings - except where national security is concerned - that are 'black' or can't be made public surely arouse the public suspicion. Unless the gov think that the rakyat are still having brain of cavemen or cavewomen. So how can agreements like roads for public use be considered as 'top secret'...for what? Transport & Works Minister pls explain this past practise & if this will continue or this expose is just for show due to the by-election in KT soon.

If there is nothing to hide in the first place, the agreements or contracts should have been made public for the interest of the rakyat - at heart. It goes to show that the BN gov previously was all out to rob us powerless rakyat coz they know we only have once every 5 years to voice our anger through the ballot box.

Anonymous said...

Hi Tony,

Thanks for your hard work.

IMHO, all these highway agreements are deliberately inked lopsided to benefit the other party; obviously, corruption is the reason.

At some point, legal action must be taken against all the people involved. What they had done way back from TDM's admin in terms of these "agreements" as their "colloboration" is criminal.
It is akin to abuse of power, extortion, siphoning the wealth of the country into the pockets of cronies.

No need to guess: we MUST change this corrupt govt. ASAP.