Thursday, November 17, 2011

Personal : PLUS ++

It was two weeks ago that the joint offerors for privatizing PLUS Expressway Bhd. have agreed to waive the Rm2.9 billion compensation from the government. A toll-freeze rate starting this year until 2015, will save another Rm3.6 billion for the taxpayer money. I would like to use the term 'taxpayer money' because after all the government is only the custodian of the money.  

Under the revised toll concession agreements, the five-year toll freeze as announced by Prime Minister, Datuk Seri Hj. Najib Razak would be implemented on four expressways which are the North South Expressway (NSE), NSE Central Link (Elite), Malaysia-Singapore Second Crossing (Linkedua) and Butterworth-Kulim Ekspressway (BKE) until 2015.

Beginning 2016, the toll rate increase under the new structure would be fixed at 5% for every three years on the four expressway. This compares with the current structure of a 10% hike every three years for NSE and Elite, 25% every five years for Linkedua, and 15% every three years.

Source taken from The Star, 17th November 2011.

Under the new structure, UEM Group and EPF said all concessions would expire on Dec 31, 2038, with no further extension. As such, the concession periods for Elite (which is supposed to end on May 31, 2030), BKE (June 27, 2026) and Penang Bridge (Dec 31, 2021) would be extended to align with the new arrangements. 

The deal was structured that way to make the deal 'bankable'.  Personally, I do not really agree with the extension of concession since road users have to pay on longer term. Current concession holders are tightly held by their bond commitment, which were used to finance the construction of highways. Beyond the concession expiry date, they have no longer to service the bond and the highway rates must come down. It is ridiculous to charge the highway users with the rate at the end of 2038, since they no longer to service the bond. =)

Foot Note: This article is only the personal opinion of the writer only. Cannot be taken as sugesstion or persuasion.       

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