TO take over or not to take over – that is the multi-billion dollar question. I am referring to the debate over whether the government ought to take over the country’s toll concessions.
All things considered, let’s put a closure to this issue and this can come about if the government were to announce once and for all that this is not going to happen. Period.
It just doesn’t make sense from the economic and financial standpoint. In the first place, ever since the privatisation of highways 30 years ago, paying toll has become a Malaysian way of life.
It started with the over 1,000km North-South Expressway or better known as PLUS spanning across the length of Peninsular Malaysia, then followed by the sprouting of numerous highways all over the place as companies jumped on the toll bandwagon.
The latest hint that a government takeover of toll concessions is a No-No comes from Prime Minister Tun Dr Mahathir Mohamad.
He said on Monday that the government’s expenses will be “considerably higher” if it decides to do such a takeover, citing the case of PLUS as an example.
Taking over PLUS alone would mean the government forking out RM30 billion.
“We might as well use the RM30 billion to pay off our debt to ease our burden. There are suggestions by the private sector to reduce tolls by taking over toll concessions, but it is not even up to 25% (of reduction),” said Mahathir.
Such a takeover is not only unsustainable but even if such funds are available, the money could be used for more pressing things like affordable housing, income-generating projects that could create thousands of jobs and for building toll-free highways in places that still don’t have one.
After paying for such exponential costs, then there is the question of maintenance costs.
And for so many years now as revealed by Works Minister Baru Bian recently, the government is acutely short of funds to maintain the non-toll roads or better known as federal roads that come under the purview of the Public Works Department.
In hindsight, the original rationale for the privatisation of highways that Malaysia embarked on over 30 years ago was to ease the government’s financial burden.
More toll concessions were later awarded with the economic crisis gripping Asia then.
On the surface, they looked like sweet deals and there were many who regard the concessionaires as money-printing machines given the notion of the ever increasing number of vehicles using their highways in a predominantly car society like Malaysia.
It’s public perception that they are laughing all the way to the bank but this is a misconception.
The concession companies have to service multi-billion dollar loans and imagine the interest on such loans.
Even after being in operation for 30 years, PLUS for instance, is still having some RM30 billion in loans to service and after having to undertake expansion works and going through a loan refinancing exercise, its concession period was extended for another 20 years.
The original concession was to have expired last year but with the extension, it now means that you and I will have pay toll on the North-South Expressway (NSE) till 2038.
Therein lies another paradox to the original plan by the government to privatise highways in Peninsular Malaysia.
Billions upon billions have gone into paying compensation to the concessionaires all these years and this happens whenever the government decides against the contractual toll increase as provided for under the concession agreements.
Under such pacts, there would normally be a toll hike once in three years but when this is held up, usually due to the impending general election or even some by-elections in the affected stretches, the contractual toll increase is not implemented.
There has not been a toll hike along the NSE for the last 14 years and the compensation either in cash or kind must have been astronomical.
Moving forward, it would make immense financial sense for the government to just allow such toll hike as per the contract otherwise why have such a clause in the first place? A contract is binding anyway.
In most cases, withholding such a hike might make political sense in appeasing toll users but the futility of such thinking was proven in the 14th general election last year.
The then Barisan Nasional government abolished toll at two places in Selangor just four months before GE14, apparently to wrest back control of the premier state from Pakatan Harapan.
It was toll-free at the highly lucrative Batu Tiga toll in Shah Alam and at Sungai Rasah but as it turned out, voters once again overwhelmingly returned Pakatan to power with the BN losing even more seats.
It’s obvious, too, that there has to be a holistic review of the terms in the award of toll concessions for the future to avoid some of the pitfalls and the pains that the government and toll users end up with.
Comments: letters@thesundaily.com
