However, the Minister in-charge of the Economic Planning Unit (EPU) in the Prime Minister's office, Tan Sri Nor Mohamed Yakcop has on Monday revealed in Parliament that it will cost a total of RM231 billion to acquire the 26 highway concessionaires in Malaysia, essentially hinting that the effort to restructure the toll concessionaires in Malaysia will not happen.
I have requested for the detailed breakdown of the cost of the buy-back in the Parliament and the Minister has agreed to provide them in writing. I will be handing over a formal letter to request to request for the above information from the Minister and I hope that he will reply as soon as possible so that the interest of millions of users who use tolled highways are protected.
We firmly believe that the cost indicated by the Minister is grossly inflated at prices which are meant to compensate fully the concessionaires for the loss of future profits. Should the Government decide to pay these concessionaires for 100% of the loss of future profits, then it makes the entire buy-back exercise pointless as it just means that the burden of toll is shifted from the commuters to the tax-payers.
However we estimate that the real cost of buying back the toll concessionaires will be closer to RM25 billion based on the following factors:
- The declassified highway concession contracts has revealed clearly under expropriation terms of the highways that the Government does not have to pay compensation for future profits, with the exception of the North-South Highway and the Penang Bridge. Therefore, for a highway like the LDP which still have a lifespan of 20 years, and the toll rates expected to be increased to RM3.20 from the current RM1.60 by 2016, it is expected to only cost the government less than RM1.5 billion to buy back. In my previous 2 oral questions in parliament, the Ministers have outrightly refused to honestly answer my question on the cost of expropriation.
- For the North-South Highway and the other highways owned by PLUS Expressways – Butterworth-Kuli, ELITE, 2nd Link and Seremban-Port Dickson Highways, the Government will be above to buy-back the shares it does not already own from Bursa Malaysia for a total cost of approximately RM15 billion only. The North-South Highway is by far the largest and longest highway in the country making profits of RM1.4 billion per annum and increasing, with compensation amounting to more than RM700 million per annum from the Government. This concession is set to expire only after another 30 years.
- The Government does not need to buy-back all highways, but only those who are clear-cut making astronomical profits at the expense of the daily commuters. Litrak, the owner of the LDP had for example projected total profits of RM18.8 billion for the LDP concession, despite the cost of the highway, including interest, amounting to only RM1.327 billion.
In addition, Tan Sri Nor Mohamed Yakcop had provided the excuse that the RM231 billion cost mentioned had also included future operational and maintenance cost. This is once again misleading as the maintenance cost as a proportion of capital outlay is very low (and can be even lower with open and competitive tenders), amounting to approximately RM200 million and RM10 million per annum for PLUS and LDP respectively. These amounts are less than the hundreds of millions allocated to compensate concessionaires annually today.
We look forward to the reply from the Tan Sri Nor Mohamed Yakcop, and should the Minister require any assistance or further clarifications from us with regards to formulating the buy back plan which will cost tax-payers the least amount of money, we will be most obliged to provide them to the EPU at no cost to the Government. We have also provided him with a complimentary copy of our Alternative Budget which outlines the concessionaires buy back proposals for his reference.