March 18, 2018
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DAP MP Ong Kian Ming says buying back highways from concessionaires is cheaper than continuing the practice of giving them compensation. ― Picture by Choo Choy MayDAP MP Ong Kian Ming says buying back highways from concessionaires is cheaper than continuing the practice of giving them compensation. ― Picture by Choo Choy MayKUALA LUMPUR, Nov 10 ― It will be cheaper for the federal government to buy back highways from concessionaires rather than continuing the practice of giving them compensation for not increasing toll rates, a DAP MP said today.

Responding to those sceptical of the financial viability of federal opposition Pakatan Harapan’s proposal to abolish toll for highways, Serdang MP Ong Kian Ming pointed out that the government had already paid out billions in ringgit to compensate highway toll operators.

He said the federal government either gives compensation or extends the companies’ concession period in order to defer toll hikes, or allows “unreasonable” toll hikes for highways.

“The compensation cost payable by the government (if the toll rates are not allowed to be hiked) FAR EXCEEDS the cost of buying back the toll highways from the concessionaires!

“Indeed, according to a parliamentary reply, the government has already forked out RM4 billion from 1990 to 2015 for compensation to toll companies including RM1.05 billion for the LDP and RM443 million for SPRINT, two of the earliest and most lop-sided toll concession agreements!” he said in a statement today.

Ong was referring to the Works Minister’s October 20, 2016 written parliamentary reply to Sepang MP Mohamed Hanipa Maidin, where over RM4.07 billion was listed as being paid out as compensation for 28 toll highways.

Ong also said that the government has continued to provide subsidies or lend money for the concessionaires to build or upgrade toll highways.

“For example, my colleague Tony Pua, pointed out back in 2012 that the government had given a grant worth almost RM1 billion to the concession holder for the MEX highway which was 74 per cent of the total construction costs of the project,” he said.

The government also provided RM20 million out of the total cost of RM90 million for an interchange to Seri Kembangan on the MEX highway to pay for land acquisition, but the profit from the additional RM2.20 toll per car for this new entry and exit only benefits the toll concessionaire, he said.

“Rather than continue to subsidise these toll concessionaires, it makes more financial sense for the government to buy back these tolls and fund any new construction or highway upgrades from its development expenditure,” Ong said.

Arguing that buying back the highways would give long-term financial benefits to both the federal government and motorists, Ong said this would also be the cheaper option when compared to giving compensation to defer the toll hike amount stated in what he claimed was “lopsided” agreements that favour toll companies.

He noted that Pua had in 2009 estimated the government would have to fork out RM1.4 billion to buy back the LDP highway concession, adding that the government had by the end of 2008 paid out RM628 million to LDP concessionaire Litrak and that the cumulative amount had grown to RM1.05 billion by the end of 2015.

He further claimed that the federal government has no political will to enforce toll agreements where concessionaires are required to take mitigating measures to reduce traffic congestion on their highways.

“The toll concessionaires have strong lobbying power which they have, no doubt, put into good use in ‘forcing’ the government not to buy back these tolls, to continue to pay them excessive compensation and not to enforce the conditions stated in these agreements,” he claimed.

Ong assured however that a Pakatan Harapan-led government would pay the proper amount due to concessionaires during the process to buy back the highways, but would need complete access to all toll concession agreements ― some of which are still classified under the Official Secrets Act (OSA).

“PH will clearly follow the terms and conditions as set out in the concession agreement for the toll buy-backs. The toll concessionaires will earn an acceptable rate of return for their investment in these highways (but not earn supernormal profits),” he said in addressing fear of uncertainty in the stock market as many concessions are owned by listed companies or government-linked investment corporations such as EPF, Khazanah Nasional and PNB.

“The toll buybacks will take place only after a careful study of all the terms and conditions in these concession agreements and in a way which is responsible and fair to the government, to the tax payer, to the road users and to the concessionaires,” he said.

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