PUTRAJAYA - The Malaysian government has made a RM6.2 billion (S$2 billion) bid to take over four toll highways in the Klang Valley, in a move to fufil its election pledge to reduce the cost of living by removing toll roads, or at least reducing the fees charged to road users.
The four highways, operated by units of listed infrastructure company Gamuda, are among some 20 expressways that criss-cross Kuala Lumpur and its Selangor suburbs.
These highways were built from the 1980s onwards as the government under then Prime Minister Mahathir Mohamad privatised their operations to make them more efficient, but over the years the public has raised complaints of high toll charges.
The toll concessionaires have agreements in their contracts to raise toll fees every few years over the course of the 20- to 30-year concession, failing which the government would have to pay them compensation.
Tun Dr Mahathir, in his second stint as prime minister, must now undo how some of these highways operate as his four-party Pakatan Harapan government has promised to ease the cost of living by removing high toll charges.
"This is the first step of the government to lessen the burden of the highway users and fulfil the promises of Pakatan Harapan," Finance Minister Lim Guan Eng said in a statement on Saturday (June 22), as quoted by local media.
He said taking over these four highways - called LDP, Sprint, Kesas and Smart - would save taxpayers RM5.3 billion in compensation to the concessionaires, Mr Lim said.
"The compensation need not be paid after the highways are taken over by the government. This means the government can allocate an extra budget of RM5.3 billion to assist the people in the coming years," The Star daily quoted him as saying.
He said the success of the bid depends on due diligence, the support of shareholders and creditors of the four concession companies, and the final decision of the Malaysian Cabinet.
The takeover will be financed through a special purpose vehicle (SPV) company under the Minister of Finance (Inc), a company under his ministry. The SPV will issue bonds to pay for the highway concessions.
"The congestion charges are enough (for the SPV) to service the debts, including operational and maintenance costs without having to depend on allocations from the MOF," said Lim.