Congestion charges will finance bond issued for tolls takeover

The charges will be enough to repay the bond issuance if operational costs do not overrun to a level that requires the attention of MoF, says Lim

pic by TMR File

CONGESTION charges will pay for the four tolled highways takeover.

The government’s takeover, valued at RM6.2 billion via bond issuances, is pending Cabinet approval and does not require any fund allocations.

Finance Minister Lim Guan Eng (picture) said the congestion charge that is to be imposed will be enough to repay the bond issuance if operational costs do not overrun to a level that requires the attention of the Ministry of Finance (MoF).

He was responding to a query by Datuk Seri Dr Wee Ka Siong (Barisan Nasional-Ayer Hitam) on why the congestion charges were introduced to replace the existing toll charges and how people would benefit from it.

On the identity of the local bank that was mentioned as being part of the bond issuance, Lim claimed it to be a “reputable local bank”.

“The government plans to implement the highway congestion charge starting Jan 1, 2020, only if the Cabinet approves the move,” he told the Dewan Rakyat.

The takeover exercise is currently awaiting further approval of the concessionaire shareholders, as well as the final Cabinet approval prior to a successful completion.

The congestion charges will see motorists levied at a 30% discount during peak hours and toll-free during off-peak hours.

“Users of the four highways would enjoy savings of up to RM180 million a year — with savings of nearly RM2 billion until the conclusion of the concession agreements,” Lim said.

The concession agreements for these highways, Lim added, will expire between nine and 23 years, which then will lead to the congestion charges being reduced as there will no longer be a need to repay the bond issuance.

“Once the takeover of the highways is completed, these concessions will not be extended and will expire according to the existing agreements.

“Then, the congestion charges will be further reduced and will only cover the operational and maintenance costs of the highways, without any form of profit going to the government,” he said.

A study was conducted by a local financial institution before the takeover formula was presented to the Cabinet in February this year.

“The formula will see the government saving at least RM5.3 billion in compensation payments to the four concessionaires for not raising toll rates over a period of between nine and 23 years,” Lim said, responding to a supplementary question by Wee on formulas used to calculate the takeover amounts.

On whether the congestion charges would ultimately be abolished, Lim said it would depend on the government’s finances.

“If the government finances have improved, we should be able to abolish tolls by then,” he told reporters at the Parliament lobby.

Last month, the MoF announced that it would take over the toll concessionaires of four main highways as the first step towards reducing the burden on road users, and to fulfil Pakatan Harapan’s promises.

The four tolled highway concessions are those in which Gamuda Bhd has a significant stake — namely the Damansara-Puchong Expressway (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Shah Alam Expressway (Kesas) and Stormwater Management and Road Tunnel (SMART).

The breakdown of the offer price is RM2.47 billion, LDP; RM1.98 billion, Sprint; RM1.38 billion, Kesas; and RM369 million, SMART.

Gamuda stands to generate RM2.36 billion of the RM6.2 billion cost.

This signifies a RM124 million premium on RM2.23 billion which experts estimate is the fair value for the company’s stakes.

Overall, Gamuda is estimated to post a net gain of RM1 billion after netting the acquisition value of RM2.36 billion against the book value of the toll roads attributed to the company’s shareholdings.