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Press Conference

by Lim Guan Eng

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(Petaling Jaya, Friday): DAP regrets that Works Minister continues to defend PLUS by justifying PLUS' right to increase the toll hike by 10% for the North-South Highway next year. Samy said on 17.5.2007 in the Dewan Negara that the public should not think that the yearly RM 1 billion toll collection PLUS receives from the public is enough as PLUS needs to pay interest for loans, maintenance cost and workers' salary.

DAP regrets that Samy continues to defend PLUS with inaccuracies and wrong facts merely to justify the toll hike next year that extracts unwarranted huge profits for a single company at the expense of 26 million Malaysians. PLUS posted a net profit of RM1.1 billion for the year ended Dec 31, 2006 up 4% from the RM1.06 billion a year ago on higher toll collections. Group revenue was RM2.09 billion for 2006 from RM1.67 billion the year before. Operationally, the group generated cash flow from operating activities of RM1.32 billion with a strong cash balance of RM2.6 billion as at December 31 2006.

So the revenue is RM 2.09 billion whilst it is net profit that is RM 1.1 billion. Samy is wrong to say that the RM 1 billion toll collection is not enough when they make RM 1.1 billion in 2006.

Samy has again admitted that the government and him were wrong in signing the original toll agreements when he said that actual traffic volume will be taken into account before toll can be increased in future new agreements to be signed with highway concessionaires. Further no more compensation would be paid to the concessionaires even if there was a difference in the projected and actual traffic volume. 

At present the contracts allowed huge benefits to PLUS as follows:-

1. PLUS Expressway Bhd posted a net profit of RM1.1 billion for the year ended Dec 31, 2006 (FY06) up 4% from the RM1.06 billion a year ago on higher toll collections. The strong dividend growth of 39 per cent as against 9 per cent for 2005 far exceeded the target Key Performance Indicator (KPI) for a minimum dividend growth of 12 per cent for 2006;

2. PLUS spent only RM 6 billion to complete the North-South Highway as almost half of was built by the government at a cost of RM 3 billion. In other words PLUS got half of the highway for free;

3. PLUS enjoyed a 5-year tax exemption on profits which expired in December 2006 where it made not contribution at all to the nation's funds and enjoyed its profits free of tax;

4. PLUS has already collected RM 15.9 billion since it operated the North-South Highway in 1988, recording a profit of RM 3.7 billion against the construction cost of RM 5.94 billion and RM 6.27 billion in maintenance cost. This does not include the billions of ringgit in compensation paid by the government to PLUS and far exceeding its total construction and maintenance cost of RM 12.21 billion (see below);

5. Loan guarantees given by the federal government allowing PLUS to enjoy low favourable interest rates.

Works Minister Datuk S.Samy Vellu announced that the government still paid RM 38.5 billion in compensation to the toll highway companies. This RM 38.5 billion, which does not include the toll collected from the public, exceeds the construction cost of the highways. Naturally many poses the important question why the government can not build the highways on its own when it is cheaper to do so.

With such benefits and support from Malaysians allowing PLUS to enjoy billion ringgit profits yearly, PLUS should contribute back to the national interest by waiving the 10% toll increase. If PLUS refuses, then the government should reject the proposed increase bearing in mind that PLUS can expect to enjoy tens of billions of ringgit in future profits until the concession period ends in 2038.

The government should reject such a proposed increase and review the concession agreement based on national interest on whether PLUS or 26 million Malaysians have benefited more. National interest requires the government to put the interests of 25 million Malaysians ahead of one single company.