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Only A Complete Review Of The North-South Expressway(NSE) Privatisation Contract Can Reverse The Government’s Policy Failure That Has Turned Privatisation Into Piratisation That Benefits The Few At The Expense Of The Poor

Press Statement
 by Lim Guan Eng

(Melaka, Wednesday):  The 10% toll hike on the NSE next year reminds Malaysians of the government’s policy failue that has turned privatization into piratisation that benefit the few at the expense of the poor. Only  a complete review can ensure a reasonable and just toll rate. Further many Malaysians are unhappy at  the service, traffic congestion and poor road quality of our highways. 

The privatization policy was flawed from the start with generous guarantees to Projek Lebuhraya Utara-Selatan(PLUS) not only in terms of guaranteed bank loans but also traffic volume to PLUS, effectively guaranteeing minimum revenue received. With such generous guarantees from the government where any company without any track record building highways can do the job, there is no reason why the can not undertake the job itself. 

If BN MPs are sincere in stopping PLUS from making huge profits by increasing toll rates, they must press for a full and complete review of such unfair privatization contracts. Or demand that road tax be abolished or reduced to reflect the reduced financial commitments by the government to building roads. 

Works Minister Datuk Samy Vellu had said that the government had to pay RM 80 million compensation  annually to (PLUS) to offset losses owing to the freeze on toll rates since 1998, when the annual toll increase was changed to an increase once every 3 years. The concessionaire agreement was also extended from 2018 to 2030. PLUS has collected more than RM 9 billion since 1987 with more expected to come in the next 25 years. 

In September 2004, Datuk Samy Vellu said the Government has paid out RM1.04 billion in compensation to highway concessionaires as part of efforts to increase gradually toll rates over a five-year period from 1999. Apart from the RM 1.04 billion in government compensation, these companies also received RM 10.8 billion in toll charges namely:-

  • PLUS (concessionaire of the North-South Expressway);

  • Lingkaran Trans Kota Sdn Bhd or Litrak (Damansara-Puchong Highway);

  • MTD Capital (Kuala Lumpur-Karak Highway);

  • Konsortium Lingkaran Tengah Sdn Bhd or Elite (North-South Expressway Central Link);

  • Projek Lintasan Kota Sdn Bhd or Prolintas (Ampang-Kuala Lumpur elevated highway);

  • Linkedua Bhd (second link expressway between Johor Baru and Singapore); and,

  • Penang Bridge Sdn Bhd (Penang bridge); and

  • PLUS also earned an additional compensation of RM331.68 million this year for agreeing to close the Senai toll plaza in Johor in 2 March 2004 instead of 2030 in exchange for the RM1.2 billion it would have lost in collections over the next 26 years.

With such generous guarantees, it is not surprising PLUS enjoys the highest operating margin amongst toll concessionaires in the world of 82-3%, recording pre-tax profits of RM 736 million over a turnover of RM 1,580 million in 2003. Projected profits by PLUS this year is expected to be RM 800 million all contributed by Malaysians who continue to suffer congestion in highways and toll plazas. For the government to allow PLUS unfettered powers to increase toll rates with such high profits is not just irresponsible but also not in the interests of 25 million Malaysians. 

Clearly the government is stubbornly going ahead with toll hikes despite the losses and opposition from the public. As BN can claim that the huge mandate gained in the 2004 general elections showed approval for such toll hikes, the people can only register their protest in the next general elections.

(15/12/2004)

* Lim Guan Eng, DAP Secretary-General