Friday, October 15, 2010

EPF To Acquire PLUS: Robbing Peter To Pay Paul?

EPF’s proposed Plus takeover like ‘robbing Peter to pay Paul’, says Pua
By Clara Chooi October 14, 2010

KUALA LUMPUR, Oct 14 — DAP MP Tony Pua has silenced calls for celebration over the Employees Provident Fund’s (EPF) possible acquisition of Plus Expressways Bhd, claiming it would be akin to “robbing Peter to pay Paul”.

The Petaling Jaya Utara MP told a press conference in Parliament that in the first place, the terms of the toll concession itself was unfair and should be reviewed, before any sale was made.

“Everybody is supporting EPF because EPF pays returns to workers. I’m of the view that this will be a case of robbing Peter to pay Paul.

“You are sucking from the people with an unfair toll concession contract, to pay workers. It will be EPF using an unfair contract to pay the people. This is not the way for EPF to generate returns for the people,” he said.

Pua added that if that were the case, then the government should create more highways, create more unfair contracts and allow EPF to manage them so the body could give good returns to the people.

He explained that the toll-road concession contract was unfair for it stipulates that every three years, Plus was allowed to increase its toll rates by 10 per cent.

Failing which, he added, the government would have to compensate them.

“Government compensation to Plus last year was RM850 million. This is a contract that will last until 2038... it is an unfair contract.

“This is a highway that burdens Malaysians, businesses and consumers who use the roads regularly to travel between cities in the peninsular,” he said.

Pua said that Plus makes an annua profit of between RM1.2 billion to RM1.5 billion due to increasing traffic and was a cash cow.

“It has RM2.1 billion of incoming cash every year. They have some of the most lucrative terms for a highway concession,” he said.

A recent report in The Star English daily said that although there are five parties at present bidding for UEM Group Bhd, sources believe that EPF was still a shoo-in to take over Plus.

Two other parties so far – MMC Corp Bhd and Asas Serba Sdn Bhd – besides EPF, have gone public with their respective bids.

Pua said today that since a takeover was impending, Khazanah Nasional Bhd, which owns 100 per cent of UEM, should create an open bidding platform for the sale of Plus.

UEM owns 38.5 per cent of Plus. Khazanah also has a direct stake of 16.7 per cent, which means the government investment arm controls 55.2 per cent of Plus.

At present EPF owns 12.27 per cent of Plus.

“They should put in a target. For example, toll rates must be frozen, toll concession period should be maybe 10 years.

“Do an open bidding to see which party will pay the highest. That way, the government will gain because Khazanah will get the highest price for its assets rather than a direct award,” Pua said.

He also suggested for toll rates to be restructured to ensure they were more acceptable to the people.

“Plus today suspended their shares pending an announcement. We do not know what it is but it could be related to this acquisition.

“if it is, we will be very disappointed because they have not resolved the fact that Plus will continue to be making hefty profits at the expense of commuters. Disproportionate to the cost of construction of the highway,” he said.

When asked if he was against the idea of allowing EPF to acquire Plus, Pua said, “I am against EPF taking over immediately, under the current terms of the concession. Actually, I am against anybody taking over under the current concession terms. You must first restructure the contract terms.”

He reminded that the opposition had proposed how the government could take over the Plus concession so that they could eventually freeze toll rates and be toll-free after seven or eight years.

“This is because the toll money collected would be enough to pay for the acquisition,” he said.

MCA, Pua pointed out, had also supported such a proposal.

“They had a study team and came up with a proposal slightly different from ours but essentially, it is the government taking over and being able to substantially reduce rates.

“None of these proposals have been carried out. So now toll rates remain high or government compensation remains high,” he said.
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