KUALA LUMPUR — Feb 26, 2019: The challenges in the take over of tolled highways are more pronounced as circumstances differ from the total abolition of toll charges and such a large scale acquisition will require the government to find alternatives to finance operations if it were to seek full control.
To MIDF Amanah Investment Bank analyst Danial Razak, total abolition of toll charges means that the government has to bear the cost of operations and maintenance, hence adding another load to operational expenditure to be incurred perpetually.
“Unless there is sustainable means of financing to bear the operational costs, we believe total abolishment is hardly a reasonable move,” Danial pointed out, adding that complete abolition of toll means the government will have to shoulder an extra burden on its already tight fiscal budget.
“On a more practical tone, we could expect the government to maintain tolls at cheaper rates, introduce off-peak hour discounts or freeze toll rate hike as mentioned by Works Minister Baru Bian last October,” he said.
Danial described the arrangement as rational because the introduction of congestion charge would likely sustain future operations of the highways.
Phillip Capital Management senior vice-president (Investment) Datuk Dr. Nazri Khan Adam Khan said the government should set up a committee to communicate with investors on its move to acquire infrastructure projects such as tolled concessions.
While the move to acquire the concessions was a good step in reducing the cost of living, as well as fulfilling the promise in the Pakatan Harapan manifesto, it could give a wrong impression to foreign investors that the government is going to be involved more actively in infrastructure.
Nazri Khan said the committee could reach out to investors to explain that the government’s intention of reducing the people’s burden would not at the expense of the private sector.
Currently, there are 29 tolled expressways in the country and they would cost the government between RM130 billion to RM145 billion, including RM52 billion in debts, if it were to acquire all of them, besides the annual maintenance cost estimated at between RM1.5 billion and RM2.5 billion.
Last Saturday, Prime Minister Tun Dr. Mahathir Mohamad announced that the government had commenced talks with Gamuda Berhad to negotiate the acquisition of the concessions for four highways — Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Lebuhraya Shah Alam (Kesas) and the SMART Tunnel.
In Putrajaya, Finance Minister Lim Guan Eng said the government expects to take about six months to acquire the four concessions.
Lim said that excluding the highways under PLUS, the four highways control 48 per cent of the revenue of tolled highways in the city.
Based on initial projections, users of these highways will enjoy savings of up to RM180 million annually, with the switch from the current toll collection to a congestion charge. — Bernama