Toll concessions under review

KUALA LUMPUR: The government will revisit agreements with highway concessionaires with the possibility of reducing toll rates, said Works Minister Datuk Mohd Zin Mohamad.

He said his ministry would take steps to renegotiate the agreements with the concessionaires.

“Toll reduction is one of the possibilities after all the studies. We want to look at traffic volume, operations, maintenance cost and payback to financiers.

“We also want to see what is the future value and the current value. We can bring the future value to current value and (the concessionaires) can repackage and refinance to reduce the burden of the people. That is one option,” said Mohd Zin.

“One of the clauses that has been included in the agreement is the review mechanism that does not allow the toll rates to be raised,” he told reporters at the parliament lobby yesterday.

He said if the traffic volume exceeded a certain value, the rise in toll rates could be avoided.

“The ministry is conducting studies on a few highways. A few factors that we are looking into are the traffic volume, toll rates and duration of the concessions.

“We will compare these with the collection, operation and heavy maintenance costs. The concessionaires need to re-tar the highways every few scheduled years,” Mohd Zin added.

He said the government would also re-look at the North-South highway concession, which is held by PLUS Expressways Bhd.

“We will discuss with PLUS to reclassify the sections in the highway whether urban or suburban. We want to see the traffic volume, operation cost, maintenance cost and heavy maintenance cost.

“Based on those facts, we can evaluate whether the toll rates can be re-negotiated,” he said.

Mohd Zin said he had also directed his ministry to look into concessions which had been agreed upon, but for which operations had yet to start. He said while the government had to fulfil its obligation in the agreements, it also understood the tolls were a burden to the people.

He said there were 22 highway concessionaires operating in the country. “Not all are making money. There are those which are making losses and we want to know how we can help to increase its efficiencies,” he added.

The highways that are not making money are the Shah Alam Highway, Malaysia-Singapore Second Link, Ampang Elevated Highway. Lebuhraya Skim Penyuraian Trafik KL-Barat, Lebuhraya Lingkaran Kajang, Lebuhraya Shah Alam-Kuang and New Pantai Highway.

Asked to elaborate on the RM38.5 billion that the government had paid as compensation to toll concessionaires, he said only RM1.8 billion had been disbursed in cash. “The remaining amount was in the form of prolonged concessions or offset their profits,” said Mohd Zin.

Earlier during question time, Mohd Zin in his reply to a question, said the cumulative revenue of the concessionaires was RM27.6 billion while the total cumulative net profit was RM3.5 billion.

Meanwhile, PJ Utara MP Tony Pua, who raised the question, said he was satisfied with the minister’s answer.

“I was glad to hear that there is a total review of mechanism and reviewing the ways toll are charged. The fact they are reviewing the contract is a good sign.

“Although I am not sure when they talk about reviewing the contract (if) they are talking about extending it without increasing the price. Then they are making the same amount of profits.

“I hope the review means if they are making excessive profits, then the rates should be cut such that a fair deal can be arranged between the people, government and concession companies,” he said.

He added that Mohd Zin, however, did not answer his supplementary question on how much the government paid to PLUS as compensation in lieu of increases in toll rates.

“We are aware that recent concession contracts are a little bit more fair. As a result, the risk is a bit on the concessionaires. The earlier ones such as PLUS, LDP and so on are more lopsided.

“The profits of these companies are protected,” said Pua, adding that toll contracts were under the Official Secret Acts.

He said the contracts in Malaysia were directly negotiated, while overseas, contracts based on the best design and reputation, and the lowest cost to the public got the chance to win the contract.

“We need an independent panel to be able to justify what is the fair toll rate based on the estimation of traffic volume,” he said.

Pua said an independent panel must be set up to study the existing concessions based on historical profits whether it was a fair return on investment.

“For PLUS, it’s more than super fair return on investment. If I am not wrong, they have almost got back all their cost of construction and with about another decade to go on the concession,” he said.

The Edge