Pakatan promises to buy back MEX if voted to power

By Clara Chooi
The Malaysian Insider
Mar 28, 2012

KUALA LUMPUR, March 28 — Pakatan Rakyat (PR) pledged today to buy back the part publicly-funded Maju Expressway (MEX) from its concessionaire should they wrest Putrajaya in the coming polls, claiming the move would save over RM4.6 billion in taxpayers’ money.

In a statement signed by representatives from all three PR parties – Rafizi Ramli (PKR), Tony Pua (DAP) and Dr Dzulkefly Ahmad (PAS) — the leaders noted that it was one of PR’s Buku Jingga promises to restructure toll rates and the country’s many highway concession agreements, many of which they claim have over-benefitted Barisan Nasional (BN) cronies.

Speaking at a press conference in Parliament today, Pua, DAP’s publicity secretary, said it was more sensible for Putrajaya to buy back the highway with a maximum payment of RM400.9 million, instead of allowing Maju Holdings Sdn Bhd to profit from its sale.

He said that Maju Group executive chairman Tan Sri Abu Sahid Mohamed stands to make a clean profit of RM1.09 billion or 1,800 per cent of his initial investment of RM60 million from his sale of MEX to EP Manufacturing Bhd (EPMB) for RM1.7 billion.

“This profit is too high because the government has already used taxpayers’ money to fund 74 per cent of the highway’s construction cost,” he said.

This, added Pua, amounts to a whopping RM976.7 million.

“This money will not be returned to the public but will be a great profit for Abu Said,” he said.

Pua explained that according to EPMB’s March 16 Bursa Malaysia filing on its purchase of MEX, there is an “expropriation” clause attached to the concession agreement.

The clause, he said, allows the government to buy back MEX and terminate the concession with three months’ notice.

Pua added that the acquisition cost to the government would be a maximum of RM401 million which, according to the compensation terms, is the sum of the value of construction work less the government grants, liabilities, dividends or interest to shareholders, plus 12 per cent interest per annum on investments by shareholders.

“This RM401 million compensation is sufficient returns for the concessionaire which only needed an investment of RM60 million over eight years.

“This is in comparison with the RM3.2 billion that that concessionaire would have earned in projected net profits over the 25 years of its agreement. This profit will be reaped from toll payments from Malaysians of over RM5 billion,” Pua said.

“With the decision to buy back MEX, savings for the people would exceed RM4.6 billion.”

EPMB had said in a filing to Bursa Malaysia on March 16 that it will buy MEX concession holder and operator Maju Expressway Sdn Bhd (MESB) from Maju Holdings for RM1.7 billion.

The acquisition is expected to give the auto parts company a steady stream of revenue while allowing it to venture into the infrastructure sector, EPMB chairman Hamidon Abdullah had said.

According to Malaysian Rating Corp Bhd (MARC), total traffic on MEX in 2010 was 28.8 million vehicles, while average daily traffic was 78,962.

Latest figures from June 2011 show that the average volume has since increased 17.5 per cent to 92,785.

The ratings agency said the increase in traffic was due to greater awareness of the highway as well as commercial and property developments in Putrajaya and Cyberjaya.

MARC added that traffic growth on MEX would likely be sustained in the double digits in the near term before easing as the highway matures.