Finance Ministry says RM5.3b saved with acquisition of four highways

Finance Minister Lim Guan Eng says the government will not have to pay concessionaires more than RM5.3 billion in compensation by acquiring four tolled roads in the Klang Valley in which Gamuda Berhad (Gamuda) is the majority shareholder. — Picture by Firdaus Latif
Finance Minister Lim Guan Eng says the government will not have to pay concessionaires more than RM5.3 billion in compensation by acquiring four tolled roads in the Klang Valley in which Gamuda Berhad (Gamuda) is the majority shareholder. — Picture by Firdaus Latif

KUALA LUMPUR, June 22 ― Putrajaya will not have to pay concessionaires more than RM5.3 billion in compensation by acquiring four tolled roads in the Klang Valley in which Gamuda Berhad (Gamuda) is the majority shareholder, Lim Guan Eng said today.

The finance minister confirmed Gamuda’s announcement yesterday that the government wants to acquire Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (KESAS) and SMART Tunnel (SMART) and has issued offer letters to the four concessionaires for a total of RM6.2 billion.

“If the acquisition process of these highways is successful, the Government will acquire the highway concessionaires on 31 December 2019 through a special purpose vehicle (SPV) wholly-owned by the Minister of Finance (Incorporated),” Lim said in a statement.

He explained that the SPV will finance the offer of RM6.2 billion by way of bond issuance.

“The collection of congestion charge will be sufficient to service the debt, as well as to finance the operation and maintenance costs of the highways without requiring additional budget allocation by MOF.

“In other words, the acquisition cost will be self-financing through the collection of congestion charge and will not require any government expenditure,” Lim said.

He added that the acquisition of the four highways represents the Pakatan Harapan (PH) government’s first step in fulfilling its election promise to cut toll fares, which he said will not only benefit motorists and commuters using those roads but Malaysians nationwide who stand to gain from the savings.

Lim said that with the proposed offer, the government should not have to spend more than RM3.5 billion of taxpayers’ money to compensate the concessionaires in order to maintain the current toll rates until the expiry of the respective concession contract.

“The Government will no longer require to pay such compensations after acquiring these four highways.

“This means that the Government will be able to allocate additional spending of more than RM5.3 billion in the coming years for the benefit of Malaysian citizens across the country.”

He broke down the offer price of each of the four highways as follows:  RM2.47 billion for the LDP, RM1.98 billion for SPRINT, RM1.38 billion for KESAS, and RM369 million for SMART.

He said the offer is not final, subject to due diligence and approval from shareholders, the  creditors for each concessionaire and lastly, the Cabinet.

However, if the acquisition goes ahead as planned, it will mean the collective savings of RM180 million a year for commuters using the four Klang Valley highways.

He sought to explain the savings structure, saying commuters would get discounts up to 30 per cent if they travelled on those roads outside the morning and evening rush hours and that it would even be toll-free during off peak periods.

He also said there would be a cap to a proposed congestion charge that is scheduled to kick off on January 1, 2020, which would remain at the current toll rate.

But as with the earlier caveat, the finance minister said the structure of the congestion charge is not final.

He also said any surplus collection will be spent on upgrading and maintenance of public transport system.

Lim promised that the RM180 million saved “will go straight into the disposable income of Malaysian households”.

He added that if the proposed acquisition of these four highways is successful, then the government will apply the same model to acquire the concessions of other tolled highways, including inter-city highways, in future.