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Thread: Public Transport: Toll Contracts

  1. #1
    Join Date
    Oct 2008

    Public Transport: Toll Contracts

    Toll Contracts

    ARCHIVES 2013

    Friday, 15 February 2013 admin-s

    Tony Pua

    It is an open secret that the 13th general election has been postponed multiple times because the Prime Minister Dato’ Seri Najib Razak fears losing power to Pakatan Rakyat. However it is now clear that the other reason for continuously postponing the election is to ensure that he is able to dish out all the lucrative privatisation and procurement deals to favoured parties to commit any new incoming government to these contracts.

    Hence it came with little surprise that the Prime Minister’s Department awarded a new RM1.55 billion East Klang Valley Expressway (EKVE) concession via direct negotiation to Ahmad Zaki Resources Bhd (AZRB) on Wednesday this week. We would of course question the “privatisation” contract which involves the Government forking out RM635 million in soft loan to AZRB, despite the 50-year concession being the second longest awarded in Malaysia’s history.

    The obvious question is, if the Government is already able to fork out nearly half of the required investment to build the highway, why is there a need to privatise it in the first place? Is it so that certain companies can bleed the rakyat for multi-billion ringgit profits in the future?

    However, of even greater concern is the urgency at which these contracts are being dished out by the Prime Minister’s Department itself. Just 4 weeks ago, another record RM5.2 billion West Coast Expressway was finalised, giving the concessionaire Kumpulan Europlus up to 60 years to reap its profits, despite a RM2.24 billion soft loan as well as the land acquisition cost of RM980 million borne by the Government.

    Earlier last year, the Government also awarded a RM2.2 billion Kinrara Damansara Expressway (KIDEX) project to companies linked to UMNO lawyer Datuk Hafarizam Harun and recently retired Chief Justice Tun Zaki Azmi, who was also formerly UMNO’s Discliplinary Committee Chairman.

    MRT Corp which oversees Malaysia’s largest infrastructure project in history, announced in November last year that RM19.8 billion of contract works have been awarded, with 45% or RM8.82 billion going to “bumiputera” companies. Last week just before the festive break, another RM322 million worth of contracts were awarded.

    In August last year, Najib also awarded the controversial RM1.2 billion Ampang LRT Extension contract to water meter manufacturer George Kent Bhd. Despite having no experience in the rail industry, the local company with known links to the Prime Minister beat other experienced global players, including Balfour Beatty which submitted its tender at a significantly lower price.

    A month later, another RM1.33 billion contract was awarded to MRCB for other works on the same LRT line.

    The above are just a shortlist of the billions of ringgit of contracts and privatisation agreements which have been signed by the Government in the last 12 months alone. The rate at which these contracts are being dished out points to 2 things. Firstly, there is a never seen before urgency to award large contracts before the general elections, clearly out of fear that there is a real likelihood that Barisan Nasional will lose power, hence the “Sapu Malaysia” mentality.

    Secondly, in dishing out these lucrative contracts, it is certain that BN is also desperately raising funds from their cronies in return, to fight their “life and death” mother-of-all-elections to ensure its survival.

    There is hence no question that the possibility of a new Pakatan Rakyat federal government is very real. However, we will have to first overcome the dirtiest of all elections as BN will spare no expenses to “buy” victory in the polls with the massive war chest it would have raised.

  2. #2
    Join Date
    Oct 2008
    Pua: Why pay RM400b for highways that cost RM29b?

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    First Published: 7:01am, Apr 04, 2014
    Last Updated: 7:05am, Apr 04, 2014


    by Tony Pua

    FZ Graphics

    THE BN Government must be crazy to pay RM400 billion to buy back all toll concessionaires when the total cost of construction of all 26 privatized highways cost less than RM29 billion.

    The Works Minister, Datuk Fadillah Yusof told the Parliament in his reply to Member of Parliament for Sepang that buying back highway concessions in the country is not possible because it will cost a massive RM400 billion. The Minister must be completely out of his mind to claim that it will cost RM400 billion to acquire all these tolled highways!

    There are currently 26 tolled highways in operation in Peninsular Malaysia. By tabulating the cost of construction for each of these highways, the total bill amounts to only RM28.5 billion. The most expensive of these highways is the North South Expressway costing RM5.95 billion to be built. (See Table below)

    How is it that the BN Government can arrive at an incredulous figure of RM400 billion or more than 14 times the RM28.5 billion cost of construction? Is the Government attempting to compensate these concessionaires for the loss of future profits, despite the fact that the highway concession agreements explicitly state that the Government doesn’t have to make such compensations?

    What’s more, if the Government has to compensate the concessionaires for future profits, then it defeats entirely the purpose of the highway buybacks in the first place. These concessionaires might as well earn the profits over the next two decades or more, instead of laughing all the way to the bank at one go.

    Worse, if the RM400 billion figure is indeed the compensation for the loss of future profits, it means that ordinary Malaysians will actually be paying toll over the next two decades to let these fat concessionaires earn more than RM370 billion in profits!

    What type of Government do we have that signed contracts which allow these private crony companies the opportunity make astronomical profits at the expense of the man-on-the-street?

    It is hence unsurprising that the Government has no intention to buy back these toll concessions because they allow their crony companies to earn hundreds of billions of ringgit.

    This is despite the fact that all the concession agreements, barring the North South Expressway and the Penang Bridge has mutually agreed clauses which allows for the Federal Government to buy back the concessions based on the cost of construction with a guarantee that the concessions would have received a 12% return on each of the prior years of operation.

    This means that assuming all of the highways did not make a single sen over the past years of operations, then the buy back cost will hit an estimated maximum of RM50 billion, an-eighth of the Federal Government’s ridiculous estimate of RM400 billion.

    However, most of these highways made fantastic profits will in excess of 12% over the past years anyway, which means that there will be no need for the Government to compensate for “insufficient” profit in the previous operating years.

    What’s more, there is no need for the Government to acquire all these highways, and certainly not all at one go. The Government just needs to focus on highways which are clearly making unreasonable profits, such as the LDP with a net profit margin in excess of 40% to ease the burden of the rakyat.

    It is clear from the Minister’s answers, the BN government does not prioritize the interest of ordinary Malaysians who are suffering from the highest inflation rate in more than a decade. Instead, it will do its utmost to protect the ludicrous profits enjoyed by the BN crony companies for purposes better known to themselves. Hence, BN should stop the pretence of wanting to reduce the burden of the rakyat by playing the fool with a RM400 billion buy back claim.

    Table 1: List of Highways and their cost of construction in RM '000

    1North South Expressway (PLUS) 5,945
    2New Klang Valley Expressway (NKVE)* 1,000
    3Second Link Expressway 1,149
    4Shah Alam Expressway (KESAS) 1,300
    5Central Link (ELITE)* 1,000
    6Cheras-Kajang Expressway 336
    7Karak Expressway 568
    9New Pantai Expressway 1,360
    10Damansara Puchong Expressway (LDP) 1,327
    11Ampang KL Elevated Highway (AKLEH) 751
    12Kemuning-Shah Alam Highway (LKSA) 750
    13Butterworth Kulim Expressway 256
    14Butterworth Outer Ring Road 480
    15Kajang Dispersal Link Expressway (SILK) 800
    16Maju Expressway (MEX) 1,320
    17Kajang Seremban Highway (LEKAS) 900
    18Senai Desaru Expressway (SDE) 1,300
    19Sprint Expressway 1,184
    20KL Kuala Selangor Expressway (LATAR) 958
    21South Klang Valley Expressway (SKVE) 1,100
    22Seremban Port Dickson Highway 142
    23Duta Ulu Klang Expressway (DUKE) 1,166
    24Guthrie Corridor Expressway 501
    25Penang Bridge 944
    26Storm Water Management Tunnel (SMART) 1,933


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