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Why did PN delay the PLUS acquisition

Why hasn’t the Perikatan Nasional Government completed the acquisition and restructuring of PLUS Expressways which would save the Government billions of ringgit in compensation every year?

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”.  As a result, the Government must pay compensation of RM2.25 billion to these highway operators.

Senior Works Minister Datuk Seri Fadillah Yusof (Pictured)

I have written on Monday that the Government should follow through on the proposal to acquire and restructure the Gamuda highways of Shah Alam Expressway (KESAS), Damansara-Puchong Expressway (LDP), SPRINT Expressway and SMART Tunnel which will save the government hundreds of millions of ringgit in annual compensation as a result of freezing toll rates. 

On top of that savings for the Government, toll discounts of up to 30% could be offered to daily commuters of these highways.

However, I was shocked to realise that the massive RM2.25 billion in compensation for 2021 included more than a billion ringgit in compensation to be paid to PLUS Expressways. 

The affected highways include the North South Expressway, Lebuhraya Utara-Selatan Lingkaran Tengah (ELITE), Jambatan Pulau Pinang, Lebuhraya Butterworth Kulim (BKE), Lebuhraya Laluan Kedua Johor-Singapura (LINKEDUA) and Lebuhraya Seremban Port Dickson (SPDH).

In December 2019, the Pakatan Harapan government has successfully negotiated the acquisition and restructuring of the PLUS from Khazanah Nasional and Employees Provident Fund (EPF). 

In brief, the outcome of the agreement meant that

(i)    highway users will be able to enjoy 18% discount on the current toll rates without any increase in future toll rates; the 5% toll rate hikes scheduled every 3 years will now be permanently abolished, immediately saving Malaysians up to RM1.1 billion in 2020, and RM43 billion over the entire concession period until 2038.

(ii)   the Government will no longer be required to compensate PLUS for freezing or reducing toll rates, saving at least RM26 billion which can be channelled towards Malaysian all over the country, including Sabah and Sarawak, in terms of welfare and development programmes; and

In addition, the equity value of PLUS shareholders – Khazanah and EPF are fully protected in the restructured deal. The RM7.5 billion acquisition will be executed via the issuance of debt securities to Khazanah and EPF by PLUS, will be financed in its entirety via the discounted toll collections. In simpler terms, the Government will pay nothing for the acquisition of the highway, as the acquisition cost will be repaid via the discounted toll collection over time.

The above is a fantastic deal for all stakeholders – the Government, the commuters and the shareholders.  It was one of the major tangible achievements by the Harapan Government just before it was toppled by those who betrayed the rakyat’s mandate to Pakatan Harapan in 2018.

“Hence, it is mind-boggling how the Perikatan Nasional (PN) backdoor government has failed to complete the agreement after more than a year, to ensure that the Government never had to pay a single sen in compensation to PLUS Expressways ever again.” – Tony Pua

What made the financial situation inexplicably worse for the Government is that the 18% discount on toll has already been implemented from February 2020.  Had the agreement been completed on schedule in 2020, it would mean that the Government would not have to pay a single sen in compensation to PLUS for the 18% discount.  However, because of the sheer incompetence of the PN Government in failing to complete the agreement, we now have to compensate PLUS not only for freezing the toll rates which were scheduled to increase between 5 – 10% every 3 years, we have to compensate them additionally for the 18% discount already implemented.

Seriously, how financially stupid can the Muhyiddin government be?  The rakyat should offer no sympathy to the Prime Minister, Tan Sri Muhyiddin Yassin who had lamented that the treasury is running out of funds when they are utterly incompetent in managing the rakyat’s money, wasting billions of ringgit in unnecessary compensation.

Tony Pua

MP for Damansara

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