KUALA LUMPUR: Toll concessionaire Plus Expressways Bhd's RM5 billion compensation disclosure has dulled the claps and raised the question of whether a freeze on toll rates over the next five years is good for the people.
While many have lauded the government's announcement under Budget 2011, DAP publicity chief Tony Pua however believes the moratorium is short-lived and may not be good for the people.
“As the saying goes, there is no free lunch. The people’s joy that there will be a five-year moratorium on toll-rates is short-lived.
"UEM's announcement yesterday that the government may have to further compensate them nearly RM5 billion if the freeze is implemented means people will have to pay... one way or another," said Pua, who is also the Petaling Jaya Utara MP.
Based on the concessionaire agreement with the government, Plus is allowed to increase toll rates at a fixed 10 percent every three years and the last increase was in 2005. Since then the rates have been frozen.
“Should the toll rates be frozen all the way until the concession expires, then the total compensation that needs to be paid (by the government) over the next 28 years will amount to a mind-boggling of RM64 billion,” he said.
Yesterday, it was revealed that the RM5 billion in compensation was in addition to some RM2.5 billion which the government already owed Plus for deferring an earlier hike in toll rates.
Gov’t ignores DAP proposals to take over Plus
Meanwhile Plus is now in the midst of a takeover talk by UEM Group and Employees Provident Funds (EPF).
The joint venture is to acquire the entire assets and liabilities of Plus for RM23bil, which works out to RM4.60 a piece through a co-investment vehicle to be owned 51 percent and 49 percent respectively.
Looking at the share price, Pua said the government should have subscribed to DAP's suggestion, last year, to takeover the Plus concessionaire last year, when its share prices hovered below RM3 per piece.
“We had recommended that the government make a general offer to takeover the shares at RM3.30 per share,” he said, adding that the price would be far lower than the price currently being offered by the UEM-EPF joint-venture.
“Instead of valuing Plus at RM23 billion, it would have been at RM16.5 billion, saving the government a potential RM6.5 billion in cost of acquisition,” Pua said.
Pua also argued that at RM3.30 per share last year, the cost of acquisition would have been fully paid off within seven years, financed purely by the profits of Plus without further increasing toll rates.
“Hence, the concession period could have been effectively reduced to seven years and subsequently the Plus highway would be toll free or a marginal toll rate can be collected for the purposes of maintenance,” he said.
However, it was not too late for the government to launch a takeover based on the same price that the UEM-EPF had offered to ensure that the people get a “better deal”.
“The above will be the fair deal… where the acquisition does not cost the government a single cent as it is self-financed by cash generated during the 15 years concession period, toll rates will be frozen for 14 years and not just five years without having to pay any compensation.
"What’s more, the toll concession period can also be reduced by half from 28 to 14 years,” he said.