Thursday, February 26, 2009

PLUS Toll Free by 2016?

Well, if Pakatan takes over the Government.

Just as we had a press conference yesterday to provide the Government with a proposal to make PLUS toll free by 2016, in a most timely manner, our Government decides that a toll rate increase for PLUS (and 4 other highways) are most appropriate today.

But before I make my comment on the toll rate increase as announced by the Works Minister today, coming so soon after the celebratory toll booth "demolition" at Sungei Besi Highway and New Pantai Expressway, here's our concrete proposal on how we can have a toll-free PLUS by 2016 without costing the Government a single cent!

The DAP Ops RESTORE Team calls upon both the Works and Finance Ministers to make the entire North-South Highway and its related concessions such as the ELITE, Butterworth-Kulim (BKE) and the Second Link Highways under PLUS Expressways Bhd completely toll free by 2016.

Following our team's consultations to date with our legal experts, investment bankers as well as the general public, we have developed a comprehensive, practicable and creative programme to return the highways to the people in the least possible cost, and shortest possible time without compromising the integrity of the financial markets.

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.

  • Continue to collect toll only until 2015

  • Incur no additional cost for the Malaysian Government or Malaysian tax-payers
Background information:
  • PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February)

  • The Government of Malaysia, via Khazanah owns 65% of PLUS.

  • PLUS has outstanding net debt amounting to RM8.5 billion
We call upon the Government to take the following actions:
  1. The Government should 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.

  2. The cost of acquisition, added to the RM8.5 billion net debt of PLUS will amount to RM13.75 billion.

  3. 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 6 years.

  4. At the same time, PLUS should generate at least RM20b in net positive cashflow the 6 years to 2015 without further toll rate hikes and a conservative 3% pa traffic growth.

  5. Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country.
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:
  • RM14 billion saved by Malaysian consumers will reduce the cost of living for the average Malaysian in times of economic difficulties we face today.

  • 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 its subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiencies 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.
Hence, the DAP Ops RESTORE Team would like to reiterate our call to both the Finance and Works Minister to include the above proposal in the proposed mini-budget set to be announced by the Finance Minister on the 10th March for the benefit of the Government and all Malaysians.
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