Govt to issue bonds to pay for highway takeover, says Guan Eng

(The Edge Markets) – The government will fund its takeover of four Klang valley highways via bond issuances.

Responding to a question from Datuk Seri Wee Ka Siong (BN-Ayer Hitam) during Minister Question Time today, Finance Minister Lim Guan Eng said the takeover, which could amount to RM6.2 billion, of the Lebuhraya Damansara-Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Shah Alam Expressway and the Stormwater Management and Road Tunnel (SMART) would be funded by bond issuances.

“The congestion charge that is to be imposed will be enough to repay the debt issued of the bond issuance amounting to RM6.2 billion so long as operational costs do not over run to a level that requires the attention of the Ministry of Finance (MoF),” said Lim.

He explained that the congestion charge would be levied at a 30% discount, compared to current toll rates, during peak hours with highway users not paying tolls during off-peak hours.

He added that users of the four highways would enjoy savings of up to RM180 million a year — with savings of nearly RM2 billion until the conclusion of the concession agreements.

Lim further explained that once the concession agreements for the highways end, they will not be renewed, and the congestion charge would be lowered to solely bear operational costs of the highways.

He added that to freeze toll rates until the conclusion of the concessions agreements for the highways, concession holders would see compensation of RM5.3 billion.

“This payment will not be paid again once the concession agreements end, with the government saving RM5.3 billion to help Malaysians in the years to come,” Lim said.

Wee then queried Lim in a supplementary question over the premium over book value of the tolls, the net earnings of the highways as barring the LDP, the other three made losses.

In addition, he also queried about formulas used to calculate the takeover amounts associated with the highways.

“It has been made clear that the formula [used to calculate the takeover price of the highways] is a formula designed to benefit all parties,” responded Lim.

He added that the formula was by a local bank and holding expert where they would provide guarantees if the takeovers are successful, meaning the government does not have to pay costs associated with the issuance of bonds.

He added that only if the takeover was successful would users pay a congestion charge.

Wee told after reporters in the parliament lobby that the public would ultimately have to foot the bill when it comes to the bond issuance.

He added that the move to impose the concession charge broke promises made in the PH manifesto.

“Have they forgotten their promises made during the 14th general election (GE14)?” questioned Wee.