TONY PUA RAPS CRITICS WITH HIDDEN MOTIVES – NOT ONLY FROM UMNO & PAS BUT ALSO BERSATU: WHAT WRONG TIMING? TOLL BUYOUTS WILL BE ‘ENTIRELY SELF-FINANCED VIA COLLECTION OF PROPOSED CONGESTION CHARGES’

KUALA LUMPUR , 02/02/2019. Looked at traffic from the LPT Highway to the east coast from two directions near the Gombakn Toll Plaza seemed to be under control as residents began to take the opportunity to return home to their hometown in conjunction with the upcoming Chinese New Year Celebration. Pix by Malay Mail / Hari Anggara.

KUALA LUMPUR – Finance Minister’s Special Advisor Tony Pua said today the government’s plan to buy out four toll concessions will be “entirely self-financed” through the collection of congestion charges, not by raising debt.

The Finance Ministry (MoF) said in June a designated special purpose vehicle (SPV) would be raising RM6.2 billion to finance the acquisition of the four concessionaires, but Pua said taxpayers will not bear any cost.

“In this case, the RM6.2 billion will be entirely self-financed via the collection of proposed congestion charges,” Pua said in a statement issued this morning.

“This means that the Government would not need to fork out a single sen to pay for the acquisition of these highways. Hence the argument that the proposed acquisition will burden the Government, with the funds better spent elsewhere is completely untrue.”

The MoF claimed the government would have to compensate these concessionaires to the tune of between RM5.3 billion and RM6.5 billion to freeze the toll rates until the end of the respective concession periods without the acquisition.

The self-financed acquisition is expected to save Putrajaya RM5.3 billion to RM6.5 billion in compensation payments, Pua said.

“Therefore, the simple mathematics will conclude that it is vastly cheaper for the Government to acquire the highways than to pay compensation, since the acquisition cost of RM6.2 billion is self-financed,” the Damansara MP said.

“On the other hand, if the toll rates are merely frozen, these concessionaires will collect at least RM5.3 billion in compensation from the Government.”

Opposition leaders have criticised the planned takeover, claiming the acquisition made no financial sense.

They noted one of the concessions — Kesas — is nearing expiry while another two — Sprint and Litrak — are bleeding ink, prompting allegations that the Pakatan Harapan administration was bailing out the companies.

On Kesas, Pua responded by telling critics that compensation will still have to paid out to the concessionaire annually to freeze the toll rates. The Kesas concession is due to expire in 2028.

“These critics may have forgotten that even for the ‘expiring’ highway… the Government still needs to continue to compensate the concessionaire every year to freeze the toll rates,” the Damansara MP said.

Putrajaya has offered to acquire Kesas for RM1.377 billion. Pua said the fovernment would otherwise have to compensate the concessionaire between RM1.08 billion and RM1.19 billion depending on traffic volume up to the expiry of the concession.

Taxpayers will save between RM1.08 billion and RM1.19 billion in compensation payments to the concessionaire over the next nine years, the special advisor to Lim Guan Eng said.

Responding to criticism about Sprint’s poor turnover, Pua said the concessionaire is only expected to yield profits at the tail-end of the concession. Sprint is expected to generate around RM1.5 billion in profit after tax after settling all outstanding debts for the remaining concession.

“In comparison, the Government has offered RM1.984 billion to acquire the concession, of which only approximately RM870 million to the shareholders,” Pua said, adding that the RM1.114 billion in balance will be used to repay debt holders.

But Smart is expected to remain unprofitable for some time. The MoF special advisor said this explains why the government wants to buy out the tunnelled highway at a net book value of RM369 million.

If the concession was allowed to continue, Putrajaya would have to compensate the concessionaire between RM671 million and RM1,028 million for the remainder of the concession, Pua said. The Smart concession will only end in 2042.

“Again, simple mathematics will let anyone conclude that it is substantially cheaper to acquire the highway today via a self-financing mechanism.”

Three of the four concessions have agreed to the buyout in principle. Three days ago, Lingkaran Trans Kota Holdings Bhd (Litrak) and Litrak’s associate company Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint Holdings) have resolved to accept the government’s offer to take over the Damansara-Puchong Expressway (LDP) and Sprint highway.

The boards of the two companies had “unanimously found (the offer) fair and reasonable”, Litrak said in a filing with Bursa Malaysia today.

Gamuda Bhd and Kumpulan Perangsang Selangor Bhd had earlier announced they were in favour of accepting MoF Inc’s offer for their 30 per cent and 20 per cent equity interest, respectively, in Sprint Holdings.

Pua said the acquisition will see ‘future profits’ shared between the concessionaire shareholders, the government — via elimination of compensation payments — and the highway users, via reduced congestion charges.

– https://www.themalaysianinsight.com

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