Toll operators should not only reduce existing toll rates but rescind the right to annual toll increase in return for any extension of concession periods

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Media Statement
by Lim Kit Siang

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(Petaling, Friday): Works Minister, Datuk Seri S. Samy Vellu said the government would reduce all existing toll rates by allowing toll operators longer concession periods to ease the burden of commuters during the economic slowdown.

The toll rates which will be reviewed are the North-South Expressway, the Second Causeway Link and the Kuala Lumpur-Karak Highway.

Right from the very beginning in the privatisation of the North-South Expressway to United Engineers Malaysia (UEM), which was later assigned to PLUS, the exorbitant toll rates had been one of the main reasons for the DAP�s objection and protest.

It is good to see what the DAP had the foresight to oppose ten years ago are now accepted by the government as legitimate and right.

In the renegotiation with regard to the toll rates for the North-South Expressway, serious consideration should be given to the following matters:

• Since June last year, Malaysians have paid PLUS over RM3.2 billion in toll for the use of the North-South Expressway.
• In 1986, PLUS was compensated with RM176 million cash of taxpayers' money by the government for the delay and reduction in toll increase for that year.
• According to PLUS forecasts, it expects to collect over RM80 billion from toll on the North-South Expressway during the 30-year concession period. However, this is only a conservative estimate, as with the vastly increased traffic volume in the past few years as compared to the forecast traffic volume, PLUS' total revenue might be exceeded by 50 to 100 per cent, which could bring it to the region between RM120 billion to RM160 billion.
• UEM had been given RM1.3 billion government loan for the completion of the North-South Expressway, as the government had already constructed various segments of the Expressway which were handed free of charge to UEM. The sections of the Expressway constructed by the government and handed to UEM free of charge included:
• Kuala Lumpur-Seremban 60 kilometres
• Jitra-Bukit Kayu Hitam 24 km
• Jitra-Gurun 56 km
• Ipoh-Changkat Jering 54 km
• Slim River-Tanjong Malim 21 km
• Seremban -Ayer Keroh 60 km
• Ayer Keroh - Pagoh 56 km
• The irresponsible use of the RM1.3 billion government loan to help precipitate the biggest crash in the Kuala Lumpur stock market in the six-month economic crisis, causing the KLSE Composite Index to fall by 19.58 per cent, from 667.29 to 536.62 points in three days in November, wiping out RM70 billion of the investors' funds in the stock exchange in the highly irresponsible RM3.24 billion UEM-Renong deal for UEM to acquire 723 million Renong shares, representing a 32.6 per cent stake.
• UEM is a favourite conglomerate, awarded numerous privatisation projects like the MSSC, the National Sports Complex and Commonwealth Games Village, NSECL/KLIA Expressway, the KL International Airport Satellite terminal and Putra LRT System II and the construction of hospitals in West Malaysia. In the review and renegotiation of the toll rates, the toll operators must not only reduce existing toll rates but rescind the right to annual toll rate increases in return for any extension of concession periods.

If PLUS and UEM are not prepared to renegotiate the North-South Expressway concessionaire to end its one-sided nature in both reducing the toll rate as well as to rescinding the right to annual toll increase, UEM should be blacklisted and excluded from all future privatisation contracts.

In the renegotiation, a new principle and formula should be used to compute future toll rates to ensure that it is fair to all parties based on the revenue collected by highway concession operators.

There should be no automatic right to increase toll rates every year. All toll operators should in future justify every toll increase it wishes to impose in the court of public opinion.

(2/1/98)