Friday, October 16, 2015

Toll hikes due to outrageously stupid agreements Federal Government made with the concessionaires

The Minister in Prime Minister’s Department, Dato’ Seri Abdul Wahid Omar explained that “the government feels it should not continue to pay very high compensation to highway concession companies to keep toll rates from rising”.

He said the government had to pay RM510 million in compensation for the January to October period this year following the decision to postpone toll rate increase which should have been implemented in January.

“As such the Federal Government allowed concession companies to raise toll rates," he said.

The Minister himself admitted that the toll compensation paid by the Government is “very high”. Hence Dato’ Seri Wahid believes that this “very high” compensation should instead be shouldered by the man on the street.  It does not matter that they are now already suffering from the compounded effects of the Goods & Services Tax (GST), the staggering ringgit depreciation and the significantly slowing economy.

Therefore the “very high compensation” argument is an extremely poor but oft-used excuse to subject ordinary Malaysians to higher toll rates.

And yet, Dato’ Seri Wahid had the cheek to say that the increase only covered highways in the urban areas with a maximum rate increase of RM1.  And increase of “just” RM1 on the Damansara Sprint Highway meant a 100% increase in toll rate from RM1 to RM2!  That effective means a doubling of revenue for the toll concessionaires!

Instead, the real blame for the massive hike in toll rates and the “very high” compensation that the Government has had to pay all these while is because of the extreme stupidity of the BN Government when signing these concession agreements.

By awarding these highway privatisation contracts directly without any open and competitive tenders, BN colluded with these crony companies to allow them to collect high toll rates which increases over time.  As a result, these toll concessionaires BN-sanctioned highway robberies which enabled the cronies to make astronomical profits at the expense of the rakyat.

Worse, despite claiming that “the hike was carried out according to the concession agreements signed earlier”, Dato’ Seri Wahid’s department failed to learn the lessons from the past and continues to directly award highway contracts without any tenders today.  Hence we can only expect all current and future highways to continue strangling the Malaysian motorists in the future as toll rates rise even more drastically.

We have repeatedly emphasized that despite the lobsided toll concession agreements which favours the highway companies, the Government has the option to terminate the agreements at any point of time and paying compensation only for the cost of the highway less any grants provided by the Government.

It is an escape clause which is structurally affordable and can put an immediate stop to the escalating burden on the highway users.

However, the Government has repeatedly refused to do so in the past, claiming the irrational need to compensate the highway operators for the loss of future profits.  The excuse is irrational because if the Government has to compensate for the loss of future profits for terminating a concession it awarded, then what’s the point?  It might as well let the concessionaires continue to collect toll for the next few decades, rather than paying up upfront today.

The above clearly shows that the Federal Government are in complete cahoots with the highway companies and couldn’t care less for the plight of the ordinary folks of this country, contrary to the BN election manifesto.
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