The BN Government must be crazy to pay RM400 billion to buy back all toll concessionaires when the total cost of construction of all 26 privatized highways cost less than RM29 billion

The Works Minister, Datuk Fadillah Yusof told the Parliament in his reply to Member of Parliament for Sepang that buying back highway concessions in the country is not possible because it will cost a massive RM400 billion. The Minister must be completely out of his mind to claim that it will cost RM400 billion to acquire all these tolled highways!

There are current 26 tolled highways in operation in Peninsula Malaysia. By tabulating the cost of construction for each of these highways, the total bill amounts to only RM28.5 billion. The most expensive of these highways is the North South Expressway costing RM5.95 billion to be built. (See Table 1 below)

How is it that the BN Government can arrive at an incredulous figure of RM400 billion or more than 14 times the RM28.5 billion cost of construction? Is the Government attempting to compensate these concessionaires for the loss of future profits, despite the fact that the highway concession agreements explicitly state that the Government doesn’t have to make such compensations?

What’s more, if the Government has to compensate the concessionaires for future profits, then it defeats entirely the purpose of the highway buybacks in the first place. Might as well let these concessionaires earn the profits over the next 2 decades or more, instead of laughing all the way to the bank at one go.

Worse, if the RM400 billion figure is indeed the compensation for the loss of future profits, it means that ordinary Malaysians will actually be paying toll over the next 2 decades to let these fat concessionaires earn more than RM370 billion in profits!

What type of Government do we have that signed contracts which allow these private crony companies the opportunity make astronomical profits at the expense of the man-on-the-street?

It is hence unsurprising that the Government has no intention to buy back these toll concessions because they allow their crony companies to earn hundreds of billions of ringgit.

This is despite the fact that all the concession agreements, barring the North South Expressway and the Penang Bridge has mutually agreed clauses which allows for the Federal Government to buy back the concessions based on the cost of construction with a guarantee that the concessions would have received a 12% return on each of the prior years of operation.

This means that assuming all of the highways did not make a single sen over the past years of operations, then the buy back cost will hit an estimated maximum of RM50 billion, an-eighth of the Federal Government’s ridiculous estimate of RM400 billion.

However, most of these highways made fantastic profits will in excess of 12% over the past years anyway, which means that there will be no need for the Government to compensate for “insufficient” profit in the previous operating years.

What’s more, there is no need for the Government to acquire all these highways, and certainly not all at one go. The Government just needs to focus on highways which are clearly making unreasonable profits, such as the LDP with a net profit margin in excess of 40% to ease the burden of the rakyat.

It is clear from the Minister’s answers, the BN government does not prioritize the interest of ordinary Malaysians who are suffering from the highest inflation rate in more than a decade. Instead, it will do its utmost to protect the ludicrous profits enjoyed by the BN crony companies for purposes better known to themselves. Hence, BN should stop the pretence of wanting to reduce the burden of the rakyat by playing the fool with a RM400 billion buy back claim.

Table 1: List of Highways and their cost of construction