Toll-free road ‘impossible’ as Cabinet decides on takeover

Instead of toll rates, the govt moots to implement a congestion charge during peak hours

By ALIFAH ZAINUDDIN / Pic By MUHD AMIN NAHARUL

THE exorbitant price tag attached to the proposed acquisition of four highways in the Klang Valley might force the government to reconsider plans to abolish tolls altogether, experts say.

Institute for Democracy and Economic Affairs research manager in economics and business Lau Zheng Zhou said decisions on highway takeover must be made with sufficient consideration given to the long-term sustainability of road funding.

“Financing is still needed to maintain the roads that we use at the end of the day. Even developed countries like the US are facing a road-funding crisis because of a huge gap between building and maintenance costs and revenue generated from road charges.

“Some form of a highway trust fund may be a better alternative to finance highway acquisitions, so that the government has more room in the future to manoeuvre against any new private concessionaires,” Lau told The Malaysian Reserve in a text reply.

Plans to revamp the toll collection system have hit a standstill in recent months as Putrajaya might not be able to raise adequate funds to pay for the acquisition of the four highways as proposed by the Finance Ministry earlier in June.

It was last reported that the takeover plan had created dissent within the government as some felt that revenue estimates based on a congestion charge will not allow the move to be self-funded.

Instead of toll rates, the government mooted to implement a congestion charge during peak hours.

Asian Strategy and Leadership Institute’s Centre for Public Policy Studies chairman Tan Sri Dr Ramon Navaratnam (picture) said while the proposal to collect charges at peak hours is feasible, it may not allow the government to completely recover the amount it has spent on the takeover.

“Somebody has to pay and the government is not in a position to subsidise or pay. In the end, it is the users that will have to pay. However, to make it more acceptable, there can be a threshold where low-income users such as those with small cars can be exempted.

“That could be part of the government’s shared prosperity strategy,” Ramon said.

Ramon, who was the former Transport Ministry secretary general, said the government may consider a mixture of lower toll rates and higher congestion charges instead of a complete abolishment of tolls.

Malaysia’s toll roads have stacked up a massive debt pile over the years, with experts estimating the overall takeover cost to reach RM130 billion.

The toll-road sector is one of the largest issuers in the domestic bond market, with 23 companies issuing bonds and sukuk worth RM52.83 billion as of May last year.

PLUS Malaysia Bhd, the country’s largest toll operator, alone has RM30.2 billion worth of debt.

It was also revealed that the average cost for the operation and maintenance of the country’s 29 tolled highways stood at RM2.5 billion a year.

Meanwhile, routine maintenance cost and periodic maintenance and upgrade costs are estimated at RM402 million and RM459 million annually respectively.

Pakatan Harapan promised to abolish tolls in its election manifesto to address the high cost of living issues.

An unfulfilled promise on toll-free roads could threaten public support towards the new government.

However, Ramon believes the reversal is fair given the reality of the situation. “I think the promise was based on a wrong assumption which they have explained, and I think it is fair. Face the facts and make corrections rather than follow promises that are not feasible or practical,” he said.