Highway takeover not a done deal


THE government’s plan to take over four highways in Selangor will depend on the Works Ministry’s evaluation report and the Cabinet’s final approval despite acceptance by the concession holders.

A source close to the matter said some Cabinet members have aired their concerns over the Finance Ministry’s proposal and the impact to the country’s already stretched fiscal burden.

The proposed amount of RM6.2 billion to acquire the four highways — KESAS (Shah Alam Expressway), SPRINT Expressway, SMART Highway and LDP (Damansara–Puchong Expressway) — seems too expensive for political gains, said the source, who declined to be named due to the nature of the discussions.

“If this is a political decision, some members have also complained that it has no political dividend. If the government is to remain true to its manifesto, it would be to abolish tolls, not justifying whatever congestion charges mean,” the source said.

“It makes no sense to use a huge amount of money for the benefit of the people in selected areas. Why only these highways? Why not take over PLUS (the North-South Expressway)?”

Prime Minister Tun Dr Mahathir Mohamad yesterday said the government had not made a final decision on the proposals to acquire the four highways.

Finance Minister Lim Guan Eng told the Dewan Rakyat that the congestion charge to be imposed will be sufficient to repay the RM6.2 billion bond which will be issued to finance the deal.

Some sections of the administration also worry that the hefty premium paid for the takeover of these highways will set a negative precedent for similar exercise in the future.

Meanwhile, an industry expert said the takeover would leave an impression of an unnecessary “bailout”, especially when some of the concession agreements are reaching its ends, while traffic had been on the decline.

“This transaction is benefitting large corporations and shareholders, but is putting a fiscal burden on the country’s finances. The RM6 billion could have been used for more purposeful, impactful programmes,” the expert said.

The industry analyst said Gamuda Bhd benefitted from the construction of the highways and enjoyed a cash-generative business. Research reports suggest Gamuda derives about RM200 million in earnings from the highways.

Gamuda’s share price rose to a 52-week high of RM4.04 after the government announced the RM6.2 billion offer, pushing the company’s market capitalisation to over RM9.6 billion.

Meanwhile Lingkaran Trans Kota Holdings Bhd, a listed company that owns the LDP concession, saw its share price jumped 20% after the offer was made by the government.