Extending concessionaire for PLUS benefits road users and pensioners

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Projek Lebuhraya Utara-Selatan Bhd (PLUS) is owned by Khazanah (51%) and EPF (49%).[1]

PLUS' 2018 revenue was RM3.83 billion, with after-tax loss of RM93.53 million. Even with debt of more than RM30 billion, PLUS' cash flow remains very strong and its operation profitable, so much so that 4 private companies have expressed interest to buy over PLUS.

The bidders were very keen over PLUS that they were competing to outbid each other by raising their offering price, with some went as high as 30% more than the initial RM5.2 billion.[2]

EPF's 49% share in PLUS also works out well for the pension fund, ensuring high dividends that benefit retirees. In 2017 and 2018, PLUS paid out a total of RM1.15 billion dividends to shareholders. Profit from the concessionaire had improved Rakyat's retirement security.[3] 

With regards to the extension, EPF chief executive officer Tunku Alizakri Raja Muhammad Alias remarked, "This decision is a clear indication the government is appreciative that the interests of our 14.6 million-strong EPF members must be protected at all times."[4]

Pakatan Harapan (PH) government's 20-year extension of concessionaire enables the government to freeze toll price without compensating PLUS. Under previous arrangement, PLUS will increase toll price as scheduled, to which it will receive compensation if hike is not allowed.[5]

With the extension, PH is expected to save RM42 billion compensation money for the government, while at the same time successfully reducing toll price and freeze it for the next 38 years. With reduction and price lockdown, coupled with compounding rise of market value for the next four decades, the toll price will be gradually and relatively cheaper in real value.[6]

In summary, PH's move to extend PLUS concessionaire for 20 years has successfully reduced toll price by 18%, fixed toll price without hike for at least 38 years, saved government RM42 billion compensation money, improved 14 million Rakyat's retirement security through PLUS's dividends to EPF, and retained ownership of strategic assets (road infrastructures).

As the senior analyst at Affin Hwang Investment Bank Bhd, Loong Chee Wei remarked, “At the end of the day, it is consistent with the government’s policy of retaining ownership of strategic assets and reducing toll rates... It is also consistent with the government’s aim to acquire concessions that have been privatised, such as other highways, with the intention of reducing toll rates there as well.”[7]

The highways under PLUS include the North-South Expressway, New Klang Valley Express, North-South Expressway Central Link, Malaysia-Singapore Second Link, East Coast Highway Phase Two, Port-Dickson-Seremban Highway, Butterworth-Kulim Expressway, and Penang Bridge.[8]

Reference

1)https://www.pmo.gov.my/2020/01/government-not-selling-plus-18-per-cent-toll-rate-reduction-pm/

2)https://www.edgeprop.my/content/1634474/%E2%80%98plus-concession-restructuring-entails-rm75b-securitisation%E2%80%99, https://www.nst.com.my/node/539380, https://www.edgeprop.my/content/1633667/khazanah-govt-has-been-engaging-us-over-plus, https://www.theedgemarkets.com/article/cover-story-bids-and-people-behind-them

3)https://www.edgeprop.my/content/1634474/%E2%80%98plus-concession-restructuring-entails-rm75b-securitisation%E2%80%99

4)https://www.edgeprop.my/content/1634850/epf-cabinet-decision-not-sell-plus-will-facilitate-implementation-18-toll-reduction

5)https://www.edgeprop.my/content/1634748/khazanah-and-plus-will-reveal-details-toll-restructuring-initiative-later

6)https://www.edgeprop.my/content/1634575/pmo-no-toll-hike-plus-highways-until-2058

7)https://www.thestar.com.my/business/business-news/2020/01/17/plus-likely-to-restructure-bonds

8)https://www.theedgemarkets.com/article/highway-users-relieved-over-toll-rate-reduction

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