Govt may finance highway deal through RM6.2bil bond issuance

By THE STAR | 27 June 2019


PETALING JAYA: It is more rational to buy over four highways using RM6.2bil worth of bonds funded from the collection of congestion fees though the concessions for the highways end within 23 years, says Finance Minister Lim Guan Eng.

He said it would be better than paying RM18bil in compensation to compel the concessionaires to stop imposing toll charges.

He described the proposed issuance of the RM6.2bil bond, pending Cabinet approval, as a “win-win” solution because the government could save at least RM5.3bil in compensation, while motorists could enjoy savings of RM180mil annually with a 30% discount outside the peak period and a free ride during off-peak hours.

“Questions have been raised as to why the government should acquire the highways since the concession period will expire within nine to 23 years.

“Clearly, the immediate rationale will be that highway users would pay a reduced congestion charge that could save them RM180mil annually,” he said.

On Tuesday, Datuk A. Kadir Jasin, the Prime Minister’s media adviser, said it would be cheaper to pay compensation for non-toll collection rather than buying highways outright at an amount less than the proposed purchase price.

The compensation is RM1.3bil for Le­­buh­raya Shah Alam (Kesas), RM2.4bil for Lebuhraya Da­­mansa­­ra-­Puchong (LDP), RM1.98bil for Sistem Penyu­raian Trafik KL Barat (Sprint) and RM369mil for SMART Tunnel.

The concession period for Kesas ends in 2028, LDP in 2030, Sprint in 2034 and Smart in 2042.

Lim reiterated that the acquisition cost would be funded through the issuance of a bond that would be fully financed and paid for from the collection of congestion charges.

“Due to legacy issues from the previous government leading to financial constraints, the Federal Government cannot afford to fork out RM18bil,” he said in a statement.Lim said the Federal Government had on June 21 made a conditional offer to acquire the four highways, pending Cabinet approval.

“On June 22, I outlined the benefits of the acquisition, including at least RM5.3bil in compensation payments that would be saved by the government, and up to RM180mil in annual toll savings for highway users.

“Highway users benefit by paying congestion charges, which are significantly reduced from the current toll rates,” he said.

He also said the concession period would not be extended after the expiry date.

“Upon expiry, the congestion charges will be further reduced significantly to cover only the operating and maintenance costs, without any elements of profit,” he added.

Lim said the conditional offer, when approved by the shareholders and creditors of the four highway concessionaires, would still be subject to Cabinet approval, as stated in his June 22 statement.

He said the conditional offer was made after consulting professional banking consultants, in keeping with the Pakatan Harapan government’s commitment to fulfil its election manifesto “to take over highways and gradually reduce toll rates to ease public burden”.

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