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.And in the event of expropriation, the terms of compensation is as follows under 26.3.2:
(You bet it is!!)
(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.In simple terms, my understanding of the above clauses is that
(b) an amount equal to:
- (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
- (ii) any net dividends or interest received by the shareholders of the Concession Company
- the Government can at any time terminate and acquire the LDP highway concession
- 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)
- 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.
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!