Malaysia

PAS says toll collection should end when companies recover costs and make profit

BY SHERIDAN MAHAVERA
December 17, 2013

Dr Dzulkefly Ahmad says the terms of agreement with concessionaires of tolled highways should be re-negotiated. – The Malaysian Insider pic by Nazir Sufari, December 17, 2013.Dr Dzulkefly Ahmad says the terms of agreement with concessionaires of tolled highways should be re-negotiated. – The Malaysian Insider pic by Nazir Sufari, December 17, 2013.PAS wants the government to re-negotiate the terms of agreement with concessionaires of tolled highways which have already made a profit and recovered their costs so that these highways can be made toll-free sooner.

This could be done by changing the duration in which a toll is imposed, so that it is based on the amount of money a highway operator makes and not on how long the concession is supposed to last, said PAS central committee member Dr Dzulkefly Ahmad.

This is because the amount of money an operator earns is dependent on the volume of traffic using the highway, Dzulkefly said. Highways in the Kuala Lumpur city centre, for instance, are seeing a constant increase in vehicles every year and therefore, the concessionaires might recover their costs faster.

“If we look at certain highways, there is an average of 50,000 vehicles per day which use them. So the duration of toll concessions should be based on the volume of traffic, not necessarily on the number of years,” said Dzulkefly in a press conference at the PAS headquarters in Kuala Lumpur today.  

“Toll concessionaires should also look at their internal rate of return (IRR) so that if they already earn enough to cover their costs, the terms of the agreement should be re-negotiated."

For example, the Ampang-Kuala Lumpur Elevated Highway and the New Pantai Expressway are two heavily used highways where the operators would have already made more than enough money to cover their costs, said Dzulkefly.

These highways, he said, could potentially be toll-free if the government re-negotiated the terms of their concession agreements.

In a Sin Chew Daily report today, Works Minister Datuk Fadillah Yusof confirmed that toll rates would increase between 50 sen and RM2 effective January 1, adding that 15 highways would be affected.

According to the report, the affected highways are the New Pantai Expressway (NPE), Damansara-Puchong Highway (LDP), Ampang-Kuala Lumpur Elevated Highway (Akleh), Sprint Highway, Shah Alam Highway Expressway (Kesas), KL-Putrajaya Highway (MEX), Sungai Besi Besraya Highway, Smart Tunnel, Kajang Highway (Silk), Kajang-Seremban Highway (Lekas), South Klang Highway Selatan (SKVE), New North Klang Straits Bypass (NNKSB), Senai-Desaru Expressway (SDE), Guthrie Corridoor (GCE) and the Butterworth Outer Ring Road (BORR).

The vernacular newspaper quoted Fadillah as saying that the hike in the toll rate would be higher this time because the concessionaires had not adjusted the rate for six years.

Their agreements allowed them to increase the toll rates every three years.

Fadillah said the government would have to pay RM400 million to the concessionaires as compensation if the toll rates were not increased.

Dzulkefly’s statement echoed that of Pandan MP Rafizi Ramli who had said that Putrajaya should re-negotiate for reduced toll rates as toll concessionaires were already enjoying huge profits.

Rafizi said Plus Bhd, which operates the North South Highway, recorded a 61% profit margin in 2011.

Litrak Bhd, which manages the LDP and Sprint highways, earned a profit of RM180 million last year, against RM369 million in toll collection.

On Plus, Rafizi added: "Not many companies around the world can achieve this profit before tax enjoyed by Plus. Their maintenance cost is only 6% of the toll revenue. This proves that the current toll rate is already too high." - December 17, 2013.