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.


Eric said...

I agree with you YB.

If EPF can guarantee that there will be no further toll increases in the near future, then it might yet be a good deal for the rakyat. But at the current moment, IMHO I dont see that happening.


Anonymous said...

I disagreed. The sanctity of a contract shall always be respected. We can't just renegotiate unilaterally unless there is element of fraud, which in any case will be near impossible to prove. The government may be incompetent or stupid but that's not a ground for appeal. The government can however renegotiate if the other parties agreed to it, hence the buyout. This is possibly the fastest way to get out of the quagmire of one-sided agreement. Let it be done first, then push for greater transparency on rate adjustment mechanism and operation of the company post buyout. Push also for the establishment of parliamentary committee to review and approve any future public-private deal of significance public interest. The real fight shall always be before signing of the contract.

Lee Wee Tak said...

the salient point of the disposal is generate immediate huge cash inflow into some one's pockets and given the rumour of a snap GE ... put 1 and 2 together will give one a Bart Simpson evil smile expression

I agree, remove the unfair clauses but I have a more radical approach. Keep the darn contract intact until Pakatan takes over. Then review thoroughly the agreement, audit the darn companies, and nationalise the highways if there is any serious fundamental breach of terms and conditions.

Otherwise, set up that unfair public contract commission as per the brilliant 2010 aleternate budget and work towards something for all Malaysians....

marcus63 said...

i concur with wee tak that $$$ that goes from epf to uem goes directly into umno coffers as umno owns uem/renong, which have been pretty dry after losing the cash cow states of penang and selangor. umno needs this money to "buy" ge13.

Piggys said...

Eh, EPF seem to be quite rich to be investing here and there or rather rescuing all these half baked ventures. So, will EPF make good returns from this investment? That is my money in there you know!!