The government is studying the DAP proposal that the government buy back the North-South Expressway to end toll collection completely in six years.
In reply to my query during the winding up of the committee stage debate for the RM60 billion mini-budget, the Second Finance Minister, Tan Sri Nor Mohamad Yakcop said the government is studying the DAP proposal to return the expressway to the people.
The proposal, a comprehensive, practicable and creative one formulated by the DAP Ops RESTORE (Restructure Toll Rates & Equity) Team, after consultations with legal experts, investment bankers as well as the general public, has the following features:
1) Impose no further increase in North-South Expressway toll rates.
2) End toll collection after 2015 instead of 2020.
3) Create RM14 billion savings for Malaysians from 2009-2015 – saved either (i) by Malaysians using the highway because of no further toll rate increases or (ii) in terms of compensation which would have to be paid by the Government to PLUS Expressways.
4) Incur no additional cost for the Malaysian Government or Malaysian tax-payers
The North-South Expressway ‘buy-back” scheme, worked out by the DAP RESTORE Team, helmed by The Chi Chang, economic adviser to DAP Secretary-General and Tony Pua, DAP MP for Petaling Jaya Utara last month, was based on the following mechanics:
1) PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February).
2) The Government of Malaysia, via Khazanah owns 65% of PLUS.
3) PLUS has outstanding net debt amounting to RM8.5 billion.
The buy-back scheme calls on the Government to take the following actions:
1. The Government should make a General Offer (GO) to acquire all minority shareholders of PLUS with a generous 15% premium at RM3.30 per share, costing RM5.25 billion thus ensuring that minority shareholders are protected.
2. The cost of acquisition, added to the RM8.5 billion net debt of PLUS will amount to RM13.75 billion.
3. This cost will be funded by issuing Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. Total repayment will amount to RM16.2 billion over 6 years.
4. At the same time, PLUS should generate at least RM20b in net positive cashflow the 6 years to 2015 without further toll rate hikes and assuming a conservative 3% pa traffic growth.
5. Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country.
Not only will the execution of the above proposal bring joy to all Malaysians with a toll-free North South Expressway, the exercise will also have the following effects:
• RM14 billion saved by Malaysian consumers will reduce the cost of living for the average Malaysian in times of economic difficulties we face today.
• RM14 billion saved will also redirect expenditure to other more productive sectors of our economy by increasing domestic consumer demand.
• The reduced toll rates and its subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiencies and ultimately make Malaysian companies more globally competitive.
• Best of all, the plan will stimulate demand and make available substantial funds for public infrastructure development without the Government having to increase the precarious budget deficit further.
To another query, Nor Yakcop said the government welcomes public input to the government’s study on the viability of the proposal for government buyback of the North-South Expressway to relieve the toll burden of the government and the Malaysian public.