Toll hike gives concessionaires flexibility to better absorb financing costs

  • Nation
  • Wednesday, 08 Jul 2015

KUALA LUMPUR: The scheduled toll rate hike gives concessionaires the flexibility to better absorb the financing costs and growing maintenance, as well as the service charges.

The Malaysian Association of Highway Concession Companies (PSKLM), said on Wednesday that the consideration to increase toll rates was not solely based on the agreements between the Government and the toll operators, but also on the agreements between the toll operators and their financiers.

"While the association appreciates the view put forth in the article, we would like to clear some misconceptions that are apparent in the arguments against a toll hike showed in the same," it said in response to a report in a Malay daily on July 7, on a possible toll hike.

"As it is argued in the article that toll rates should not be increased when traffic congestion remains an issue, the association would like to clarify that there are many factors that necessitate the hike, for instance, highway concessionaires have borrowed and spent hundreds of millions on highway development and facilities.

"These highways and facilities need to be constantly maintained and upgraded for the comfort and convenience of the users, while new facilities and infrastructure need to be built...toll collections allow the concessionaires fund these expenses," it said.

According to the statement, the scheduled toll hike is provided for in the Concession Agreements (CA) signed between the government and the respective highway operators.

"Highways are developed under the privatisation concept, the objective of which is to allow vast networks of highways to be built by the private sector at the speed and cost which would not be possible if the development were to be undertaken or borne solely by the government.

"For instance, the toll concessionaires spent nearly RM40bil on just the construction costs to build 30 highways throughout the country, thus saving the government money which could be spent on other amenities like schools and hospitals.

"The concept of privatisation of highways also hinges on the notion that only those who use the highway should pay for it, or known as the user-pay concept.

"Based on this concept too, a scheduled toll increase is provided for in the CA. However, there were many times when the government declined the request from toll operators for an increase in toll rates.

"When this happened, the government paid compensation to the affected concessionaires, and these payments were made from federal funds. This goes against the user-pay concept, indirectly burdening taxpayers nationwide," it said.

PSKLM said, it was implied in the newspaper article that toll operators were cash cows, and as such, no increase was justified.

"We would like to highlight that the Malaysian Highway Authority has estimated that in general, 75% of tolls collected go towards debt servicing while about 20% is spent on maintenance and overheads.

"PLUS, for instance, with toll collection ammounting to RM3bil, spends a substantial sum on loan repayment (50%). The rest of its revenue is redistributed to pay for management costs (13%), scheduled maintenance costs (12%), return to shareholders (10%), maintenance costs (8%) and upgrading costs (7%)."

On the North-South Expressway alone, it said, PLUS spent more than RM20bil on construction, operations and maintenance since its inception.

"The association and the government are now in talks to find the best solution for the upcoming scheduled increase.

"This takes into consideration many issues such as the rising cost of living, our members' own financial obligations and the need to continuously provide the best services and facilities for a convenient, comfortable and safe journey for everyone," it added. - Bernama

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