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Dateline Malaysia: Perhaps the most significant insight from this article is the fact the toll operator NEVER loses money in these sham public private partnership (PPP) sweetheart deals that fleece taxpayers.
The goose that lays golden eggs
By LIM SUE GOAN/Translated by SOONG PHUI JEE/Sin Chew Daily
My Sinchew.com
2010-05-05 12:14
As the saying goes: "No one will do money-losing business", private entity Asas Serba Sdn Bhd's proposal to buy 22 tolled roads and highways in the country serves as the best example.
Would it succeed? Would the company be able to provide quality maintenance and services? It is another issue to be discussed but at the moment, the people are most concerned about how the company can guarantee a 20% toll rate reduction and no more rate increases in the future?
The words aroused the people's interests as road users have been burdened by tolls while the government has paid a lot of compensation over all these years.
The agreements signed between the government and concessionaire companies are having too many doubtful points, including interest-free loans provided by the government or the government will be the guarantor of the companies, toll rates will be increased every three years, the government will have to compensate the companies if toll rate increases are not allowed or the traffic volume does not reach the target.
Once the people protest and the government cannot afford the compensation, the toll duration will be extended. No matter how, the concessionaire companies will never suffer losses.
For example, the initial contract period of the North-South Expressway is 30 years. But after three additional contracts were signed, the toll duration has been extended to 50 years until 2038. And the duration may be further extended in the future.
After the exposure of the contracts last year, the data of the North-South Expressway contract shows that about RM5.9 billion was spent to build the highway but the concessionaire company has collected over RM10 billion of tolls from 1988 to 2006. In other words, the construction cost has been retrieved in 2005, together with the 71% of compensation, the company is actually receiving an annual net profit of RM1.2 billion. And the company is having 28 years more to collect tolls.
What a good-return business! No wonder the private company can make such a promise to reduce the current toll rates, not to extend the toll duration and no toll rate increases in the future. However, from another point of view, would the concessionaire companies agree to sell it? Moreover, Khazanah Nasional Bhd that holds more than 50% of stake of North-South Expressway said it would not sell the expressway to Asas Serba.
The private company can issue dividend bonds of up to RM50 billion to finance the acquisition of all toll roads, but why not the government? It will be a perfect ending only if the government takes over the tolled roads and highways.
DAP retorted the government's argument that RM231 billion was required to buy all tolled roads and highways and stressed that only less than RM25 billion was needed. Meanwhile, MCA also agreed to buy the North-South Expressway.
Toll rates have become a sensitive issue after the 8 March general elections. The Works Minister announced the increase of toll rates for five highways on 26 Feb last year and unexpectedly, Prime Minister Datuk Seri Najib Tun Razak announced an indefinite postpone for the increment on 28 Feb. The government has started to review the concessionaire contracts two years ago but until today, a new mechanism has still not yet been introduced. The people do not know how much money the government has spent on compensation, either.
The toll issue has reflected the lack of political commitment and it will always be a nightmare for Malaysians.