In January this year, the Government raised the toll fare for 5 privatised highways in the Klang Valley. The Bentong and Gombak toll on the Karak Highway was raised by 20% and 25% respectively. The 3 KESAS Highway toll was raised by 47%, while the Batu 9 and Batu 11 toll along the Grand Saga Highway was raised by 43% and 50% respectively. The highest increment however, was at the tolls along the Lebuhraya Damansara-Puchong (LDP), by 60%.
These 5 highways were constructed at a cost of RM4.13 billion. The toll rates have been raised excessively despite the fact that the Government has paid RM2.28 billion in compensation to date, as well as an additional RM2.59 billion over the next 5 years, or a combined total of RM4.86 billion. The compensation promised to date has already exceeded the construction cost of the highways by 18% or RM734 million.
As a further example, the total capital cost of construction of the LDP is estimated at RM1.327 billion inclusive of capitalised interest of RM142.3 million. However, the projected profit after tax (PAT) over 30 year concession period has been estimated at RM18.865 billion based on the agreement with the Barisan Nasional-led Government. The projected profit represents a 1,400% return on capital, which is excessive by any reasonable standards.
With the impending increase in toll rates for the North-South Highway, and in the light of the clear cut inequity in the concessionaire agreements, as well as in the overwhelming interest of the Malaysian public, the DAP proposes the renegotiation of all toll concessionaire contracts for Malaysian highways.
It is proposed that the toll rates shall be decided in an open and transparent formula which takes into consideration a reasonable rate of return commensurate with the risk undertaken by the concessionaire. If for example, the traffic volume has been guaranteed by the Government, then clearly, there is little risk in the venture.
Future increase in toll rates shall in turn, be decided via a open, verifiable and transparent formula which takes into account inflation rates, global cost of building materials, traffic volume, maintenance as well as the operating efficiency of the toll companies.
By using this formula, toll rate increases shall not be decided in an arbitrary manner by either the Government or the concessionaire, which often results in failure to take into account of public interests.
In the event that no amicable settlement can be arrived at with the toll concessionaires by June 2008, it will be proposed that the Government acquire the toll and highway assets of the concessionaires at a small premium to their book values.
Renegotiation of contracts or acquisition of assets is not unique in either the developing or developed world when conducted to serve overwhelming public interest. Just a month ago, the Irish Government has announced plans to acquire the copper network infrastructure from Eircom, Ireland’s largest telecommunication provider. In 1983, the Spanish Government went to the extent of expropriating Rumasa, owned by Jose Maria Ruiz Mateos, which owned 700 businesses with 65,000 employees.
The Indian Government has been acquiring private banks as late as 1980 which gave the Government 91% control of the banking sector. Both Venezuela and Bolivia has successfully taken concrete steps to regain control of their country’s natural resources such as oil & gas, as well as other minerals this year with most exploration and mining companies agreeing to renegotiated terms.
Should the highway assets be acquired, private companies shall be invited to an open, transparent and competitive tender to manage and maintain these highways. Profits to the Government arising from the operations of these highways shall be designated to Fund for Malaysian Public Transportation System or Dana Sistem Pengangkutan Awam Malaysia (DASPAM). This fund shall be managed by a Public Transportation Council, represented by the Government, the industry and the civil society to monitor the cost, efficiency and effectiveness of our public transportation system.
(Speech 10 on 2008 Budget in Parliament on Monday, September 10, 2007)
I believed the issue is indeed a great interest of all. Public transport, road, public service is naturally for public. Once the control fall into a specific group of people instead of “public control” such as private toll collectable road, it is naturally likely to became a “licence robber” due to monopoly and indispensible position. Therefore, the entire financial management matter must be transparent to public because it is for the majority of the end users. It should be some sort of direct poll study which can be done via radio, TV and SMS survey and not be only represented by a few persons in government department.
Firstly how can the goverment use the O.S.A on the highway concessionnaire agreement,What are they hidding from the public.
It is stupid for the goverment to a ward the concessionnaire to a company and then give them a soft loan to start the project.
Why pay road tax when they want to collect toll?
and guess what they are doing with LDP now?
refurbishing and repaving the roads where there’s no potholes nor cracks to begin with…
what are they trying to do? justifying the 60% increase with their acting?
and the worst part is, there’s virtually no other alternative.
When our government privatised highways in the Klang Valley and other parts of the country, it claimed that it did not have the financial resource to do build and maintain the highways.
However, our government had money (in fact a lot more money) to happily compensate the various construction companies (Wonder who really own these companies? Politicians? Politicians’ family members?) and to bailout various companies involved in megaprojects – to the tune of >RM10 billion in total.
Either our government is stupid or our government is confident that the people are stupid, have no memory, and do not how to count.
Good question from Boh-liau, YB shall post the same to Transport Ministry.
Question as why privatise when the government can instead pay compensation several X higher than the PLANNED PROJECT COST.
If the actual final cost is unavoidable, what wrong to the original quote? YB, can get support from public , I guess people of all race will support in getting the detail and want to know EXPLANATION for the exorbitant cost increase.
First they privatised utilities like telecommunication, electricity supply, water supply, garbage disposal, sewage treatment and the like, then comes postal services, tolls, and many more. And at one point I heard they intended to privatise LHDN too. Privatisation has brought with it lots of problems, corruption, misuse of power, etc. If the government or the PM thinks it is better to privatise everything in Malaysia, then perhaps they should consider privatising the whole government. Let’s begin with the establishment of PM Sdn. Bhd. with the PM as the Chairman.
11/10/09 sin chew online article refers:
http://www.sinchew.com.my/node/137804
Is this minister in pm department trying to mislead the parliament and the people?
1. the calculation of the cost of repurchase is mysterious.
2. he tried to relate the repurchase cost to the lower of 35% highway motorist user and incorrectly portray the impression that there is a trade-off between the cost of repurchase and the rural development. if there is insufficient rural development, that is the mismanagement of the cabinet and its ministries. this person apparently attempting to mislead the audience. how could this kind of irresponsible person be a minister???
3. did pr propose to repurchase all too highways or only those with high fee toll? did pr propose to repurchase all 26 of them. i think this minister must give the breakdown of each one of them!
what a ridiculous reasoning!! another no-brainer minister!!