Purchase of four highways will ensure concession periods not extended, says Putrajaya

Zurairi Ar
Lim said that the conditional offers are subject to Cabinet approval, and insisted they were made after due diligence by professional banking consultants. — Picture by Hari Anggara

KUALA LUMPUR, June 26 — The Finance Ministry said today that its proposal to buy over four tolled highways will ensure that the companies’ concession periods are not extended, as they are set to expire between nine to 23 years from now.

In a statement, Finance Minister Lim Guan Eng reiterated that the proposal will help users to save RM180 million annually.

“Questions have also been raised as to why the government should acquire the highway concessions, which will expire between nine to 23 years. Clearly the immediate rationale will be that highway users will pay a reduced congestion charge that can save them RM180 million annually,” Lim said.

“Secondly, the concession period will not be lengthened but will expire in accordance with the existing concession agreements. Thirdly, upon expiry, the congestion charges will be further reduced significantly to cover only the operating and maintenance costs, without any profit element.”

He also provided a breakdown of the compensation cost versus the acquisition cost of each highway.

For Shah Alam Expressway (Kesas), Putrajaya would have to pay between RM1.1 billion to RM1.2 billion in compensation versus RM1.4 billion in acquisition.

Meanwhile, for Damansara-Puchong Highway (LDP): RM1.9 billion to RM2.2 billion versus RM2.5 billion; SPRINT: RM1.6 billion to RM2 billion versus RM2 billion; and SMART: RM671 million to RM1 billion versus just RM369 million.

In total, Putrajaya would have spent between RM5.3 billion to RM6.5 billion to compensate the four concessionaires, as compared to RM6.2 billion to buy them.

“By issuing the RM6.2 billion bond at no cost to the federal government, there is a win-win solution because of the savings of at least RM5.3 billion in compensation to the 4 highways for freezing toll hikes,” he said.

Lim previously said the acquisition cost would be borne by highway users through a congestion charge that would remain at the current toll rate, but commuters get discounts up to 30 per cent if they travel outside six hours of “peak period”, and are charged nothing if they travel during “off-peak periods” (between 11pm and 5am).

Kesas’ concession is set to expire in 2028, LDP in 2030, SPRINT between 2031 and 2034, and SMART in 2042.

Lim also said that the conditional offers are still subject to Cabinet approval, and insisted they were made after due diligence by professional banking consultants.

He had said earlier this week that a special purpose vehicle company will finance the offer of RM6.2 billion by way of bond issuance.

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