Report: Putrajaya mulls extending PLUS concession to cut toll charges instead of selling

Syed Jaymal Zahiid
An aerial view of the traffic at the Gombak Toll Plaza February 2, 2019. — Picture by Hari Anggara

KUALA LUMPUR, Jan 15 — The government could lengthen the concession period for five major PLUS tolled roads, including the 772km North-South Expressway, as a way to reduce charges instead of the initial plan to privatise the operator, The Straits Times reported today.

The Singapore paper quoted sources as saying that a Cabinet meeting today will decide whether or not to endorse this plan or consider one of four takeover bids for PLUS.

Keeping the toll operator under state control could see the promised 18 per cent cut in toll charges materialise, in exchange for extending collections beyond the current December 2038 expiry by up to 10 years, ST suggested.

The extension’s time length, however, will depend on further negotiations, official sources told ST.

“That will put to bed criticism that this government is favouring one crony or the other who has put in the takeover plans,” a government source was quoted as saying.

The revelation comes amid mounting speculation over the Pakatan Harapan (PH) administration’s plan for PLUS and how it aims to reduce toll charges, one of the coalition’s most popular pledges in the run-up to Election 2018.

The government estimates an 18 per cent reduction would save commuters RM1.13 billion this year, and up to RM43 billion over the existing concession until 2038.

Finance Minister Lim Guan Eng has said that selling PLUS is an option, which fuelled speculation over the bidders. Local business paper The Edge has published several reports suggesting the bidding process was already in place.

Khazanah managing director Datuk Shahril Ridza Ridzuan speaks during a panel discussion at Invest Malaysia 2019 in Kuala Lumpur March 19, 2019. — Picture by Firdaus Latif

But Khazanah Nasional Berhad managing director Shahril Ridza Ridzuan said yesterday that neither the sovereign wealth fund nor the Employees Provident Fund has put PLUS up for sale. The two jointly own PLUS.

“There is actually no bidding process. These are all unsolicited offers, which were made to the government rather than the current shareholders,” he said.

Khazanah’s stance is that offers made for PLUS, ranging from RM33.5 billion to RM38.3 billion once assumption of debt is taken into account, is undervalued.

Shahril was reported to have hinted that the Cabinet would shun the offers.

Keeping ownership of PLUS would be in line with a separate Finance Ministry proposal to take over four concessions from conglomerate Gamuda for RM6 billion and cut charges by up to 30 per cent, the Singapore daily suggested.

It added that selling one highway asset — ostensibly to reduce government liabilities of more than RM1.1 trillion which PH says it inherited from the ousted Barisan Nasional government — would be a more consistent policy than then buying another.

PLUS currently has RM30 billion in debts, with RM11 billion guaranteed by the government.

Annual repayments will balloon from RM300 million to over RM1 billion from 2024, raising question marks over whether a private player can meet those liabilities, and if the government should be guaranteeing private-sector loans.

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