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Najib Tun Razakís assurances of no 10% hike in toll rates next year is meaningless when the public will still have to pay PLUS in the form of government compensation for not increasing toll hikes


Press Statement

by Lim Guan Eng



(Petaling Jaya, Wednesday) : Deputy Prime Minister Datuk Seri Najib Tun Razakís assurances of no 10% hike in toll rates for the North South Highway next year by Projek Lebuhraya Utara-Selatan (PLUS) is meaningless when the public will still have to pay PLUS in the form of government compensation for not increasing toll hikes. By deferring toll hikes due next year, Najib is indicating that elections will be held not in November 2007 but next year.


Deferring toll hikes is a clear signal that the government is deferring such toll hikes to prevent it becoming an issue in the next general elections. After the BNís expected victories in the general elections, the 10% toll hikes can then be imposed. DAP can not understand the perverse logic of Works Minister Datuk Seri S. Samy Vellu that he was trying to work out a ďwin-winĒ formula where motorists would not feel too much pain and at the same time prevent the toll concessionaires from losing money.


How can toll concessionaires be losing money when Samy himself announced in March 2007 that highway companies collected RM 23.7 billion in toll collections from the public, whilst in September 2006 he revealed that the government had also paid compensation of RM 38.5 billion to the toll concessionaires for deferring toll hikes? In other words toll concessionaires had received a combined sum of a shocking RM 62.2 billion from the public and government, far exceeding any expenditure incurred by them.


Total cost is only RM 27 billion from the estimated maintenance cost of RM 8.1 billion with the RM 18.9 billion construction cost. Even if we account for loan interests and operational costs, the RM 27 billion is far below RM 62.2 billion revenue of toll concessionaires by RM 35 billion.


How can toll concessionaires be losing money when they have already made so much money halfway through the concession period? Samy should feel the pain of ordinary Malaysians in paying higher toll rates more than the pain of highway companies unable to earn even higher profits.


DAP considers it a grave injustice for Malaysians if Cabinet approves the increase the toll rate by 10% next year when PLUS has already recorded a profit of RM 3.7 billion by 2006 even though its concession period expires only in 2038. This follow the hike in toll rates for five highways in the Klang Valley increased by between 20 and 60 percent or by between 30 cent and RM1.00 on Jan 1 this year namely Damansara-Puchong (LDP), Shah Alam (Kesas), Cheras-Kajang, KL-Karak and the Guthrie Corridor.


The government should reject such a proposed increase and review the concession agreement based on national interest on whether PLUS or 27 million Malaysians have benefited more. Based on financial results, it is clear that PLUS has benefited more.


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 nationís 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. 

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


There is no justification for the government to allow the 10% toll increase when PLUS has already made so much money. National interest requires the government to put the interests of 25 million Malaysians ahead of one single company. Further rejecting the toll hike is not much of a loss or sacrifice to PLUS, which has already benefited so much in terms of compensation, low interest rates, loan guarantees and even the government helping to build half the highway at no cost.


What is 10% toll hike when PLUS has already made RM 3.7 billion in profits and is expected to make tens of billions of ringgit more? This will be test of resolve for Prime Minister Datuk Seri Abdullah Badawi whether he is concerned about the plight of tens of millions of ordinary Malaysians who will be the hardest hit by the toll hike or more concerned about padding the profits of a one big company. To ensure that national interests are protected, Badawi should ensure that if there is no 10% hike in toll rates, there should be no corresponding compensation payment to the highway companies.



* Lim Guan Eng, Secretary-General of DAP

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