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Press Statement

by Lim Guan Eng

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(Petaling Jaya, Monday): The BN government should stop privatization when it is more expensive and costly to the public compared to maintaining it as a public asset. DAP welcome the support from Public Accounts Committee (PAC) Chair Datuk Shahrir Samad for DAP‘s long-standing proposal that the government purchase and take over the management of Projek Lebuhraya Utara-Selatan Bhd (PLUS) to resolve the problems faced by the public when toll rates are increased next year. Even if the government rejects the application by 9 toll concessionaires to go ahead with the toll hike, the people will still lose out as the government would have to pay RM 380 million compensation for deferring the toll hike. The breakdown of the RM 380 million compensation to be paid to nine highway concessionaires is:

1. Ampang-Hulu Klang Elevated Highway – RM 28 million
2. North South Expressway (Central Link) – RM 18 million
3. Seremban-Port Dickson Highway – RM 178 million
4. Kulim-Butterworth Highway – RM 10 million
5. Malaysia-Singapore Second Link – RM 6 million
6. Sprint Highway – RM 34 million
7. North Klang Valley Expressway Highway – RM 9 million
8. Penang Bridge – RM 22 million; and
9. Litrak, operator of the Damansara Puchong Expressway – RM 75 million year to reduce its toll rate of RM 2.20 to RM 1.60

Based on revenue received by the toll companies against the construction cost, it is sound economic judgment and financially feasible for the government to end this privatization exercise by turning the highways into a public asset. Shahrir said that a short payback period of bank loans for private companies (7 years) as compared to government (20 years) resulted the concessionaire seeking toll hikes. By buying over the highways Shahrir said that the toll charges could be used for maintenance works and funds saved from ending the concession could be used to fill public needs.

It is cheaper for the public when the government buys over the highways as the public is now paying toll not to enable the highway companies to get back its investment but to contribute to its profits. This is proven by the announcement in Parliament by Works Minister Datuk Samy Vellu in September 2006 that the government paid compensation amounting to RM 38.5 billion to the highway companies for deferring toll hikes as compared to RM 23.7 billion in toll collections from the public as at March 2007. 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 expenditure cost is only RM 27 billion from the estimated maintenance cost of RM 8.1 billion and the RM 18.9 billion construction cost. Even if we account for loan interests and operational costs, the RM 27 billion total costs is far below RM 62.2 billion revenue of toll concessionaires by RM 35.2 billion. In other words, the toll companies have already earned RM 35.2 billion which is 130% more than what they invested. This 130% rate of return still has another 30 years of concession to run.

Would not it be cheaper to buy over the highways and allow the government to make the RM 35.2 billion profits instead of private companies earning it? When the highway concession companies are already making such huge profits of 130% return over their investment, it is immoral that they are allowed to collect toll and increase toll rates not to take back their costs but to pad and add on to their extraordinary profits.

Prime Minister Datuk Seri Abdullah Ahmad Badawi is not running an administration based on justice, competence, efficiency and ethical conduct in the national interests if he fails to see that buying over the highways is cheaper than privatization. There is no logical reason whatsoever for the government not to buy over all the highway concessionaires, who have already recorded profits of RM 35.2 billion comprising toll collections from the public and compensation, paid of RM 62.2 billion over and above the RM 27 billion in construction cost and expenses incurred.