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Incompetent PN wasted RM2.25 billion by not continuing PH’s proposed highway acquisition

Media statement by MP for Damansara and DAP National Publicity Secretary, Tony Pua in Kuala Lumpur on 3 May 2021:

 
 

The multi-billion compensation paid to toll concessionaires by the Perikatan Nasional Government makes no financial sense compared to the proposed acquisition of some of these highways under the Pakatan Harapan government

 

Senior Works Minister Datuk Seri Fadillah Yusof announced the freezing of toll rates for several Klang Valley highways for 2021, purportedly “in view of the rising cost of living due to the Covid-19 pandemic”. The highways include Shah Alam Expressway (KESAS), Duta-Ulu Kelang Expressway (DUKE), Damansara-Puchong Expressway (LDP) and the Kuala Lumpur-Putrajaya Expressway (MEX).

As a result, the Government must pay compensation of RM2.25 billion to these highway operators. The much needed funds could have been used in other aspects of essential government expenditure, especially since the Prime Minister, Tan Sri Muhyiddin Yassin himself openly declared that the Government is short of money.

 
The Star article screenshot on the multi-billion compensation paid by PN.
 

The Perikatan Nasional (PN) government would have easily saved at least a few hundred million ringgit of the compensation to be paid had it continued the proposed acquisition of the highways owned by Gamuda Bhd as announced by the Finance Minister for the 2020 Budget. These highways included:

 
  • KESAS
  • LDP
  • Sprint Expressway
  • SMART Tunnel 
 

These highways make up nearly 50% of the Klang Valley toll collected.

In our proposal, the Government would have acquired these highways for RM6.2 billion but the Government would not have to pay a single sen for it because it will be funded via the existing toll collection. As a result, the Government no longer needs to pay these concessionaires any future compensation for ‘freezing’ toll rates – saving the Government a few hundred million ringgit in 2021 alone. 

Over the entire term of the highway concession period, the Government would save more than RM5.3 billion ringgit.  These funds could have been spent the welfare of the rakyat or on new infrastructure projects, instead of being paid to the highway concessionaires.

 
PaulTan.org article screenshot on Budget 2020’s plan under PH.
 

In addition, under the above arrangement, the Pakatan Harapan government would be able to reduce toll rates up to 30% immediately and no longer need to raise toll rates ever again, reducing the burden on the rakyat. In the first year alone, the rakyat would have saved more than RM180 million.

 

Instead, because the PN government ditched the plan, these concessionaires still own the highways and will continue to increase toll rates every two to three years. 

 
MP for Damansara, Tony Pua.
 

If the Government freezes the toll rates as expected, then they will be paying ridiculous amounts in compensation to these concessionaires amounting to RM5.3 billion. And the rakyat doesn’t get any further discounts from the toll.

This clearly showed that the current government doesn’t have any financial sense and have no ability to execute policies in the interest of the people, just like the previous Barisan Nasional government. They appear to only understand paying ridiculous amounts of compensation to the toll concessionaires under the lob-sided highway contracts.

We call upon the PN government to revive highway acquisition plan immediately to benefit both the Government and the highway users. The Minister of Finance, Tengku Zafrul Tengku Aziz, a former investment banker, must educate his Cabinet colleague Datuk Seri Fadillah as well as the Prime Minister on policies that ‘make financial sense’.

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