Sunday, March 01, 2009

RM64 Billion Toll Compensation For PLUS

RM63.83 billion.

That's the approximate amount which needs to be paid in terms of compensation PLUS Expressways Bhd between 2008 to 2038 (when the concession ends), should the Government for one reason or other decide to maintain the tariffs at the current rate. That works out to an shocking average of RM2.1 billion a year, and an incredible strain on taxpayers and the Government's finances.

For 2008, the Government has agreed to pay (or have paid) PLUS more than RM731 million in toll compensation (compared to RM698 million in 2007) . With toll rate hikes of 10% scheduled every 3 years, this amount will just keep increasing over the next 30 years.

For example, a Kuala Lumpur - Penang return trip costing RM86.60 today will cost an exhorbitant RM247 by 2038, if the tariff structure is fully complied with. And based on existing compensation terms in the agreement, the Government will have to pay for all loss of revenue from actual traffic volume, which is estimated to increase by 5% annually.

Of course, in between, the Government may just decide to raise the toll rates or alternatively, perpetually extend the toll concession with PLUS. But given the highly charged political scenario where the Barisan Nasional government has little political capital or credibility, the frozen rates may just be extended ad infinitum. Rates will never be raised in the 2 years before general elections, they will also not be raised when there is a change of prime ministers, or even before critical by-elections or for any other reasons.

Of course the compensation figure has yet to take into account the RM112 billion in actual toll which will be collected from the road users over the next 30 years based purely on current toll rates, and an annual 3% increase in traffic volume. The type of returns guaranteed for PLUS, relative to its RM5.9 billion cost of construction is just absolutely mind-boggling. Worse, PLUS isn't even the only highway concession in the country enjoying such lucrative returns (or compensations)!

The BN government has obviously dug a deep deep hole for themselves, and are now stuck between the devil and the deep blue sea, with their past excesses fast catching up on them.

But for PLUS at least, there's an "easy" way out. DAP has proposed that the Government "privatises" PLUS Expressways from Bursa Malaysia with RM13.75 billion which will be more than paid for within 6 years of operations. This means that the Government and hence tax-payers do not have to fork out a single additional cent.

Come on BN, for the sake of the people, let go of your ego and pride and do something right for once! ;-)
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