PETALING JAYA: Integrated facility manager and engineering contractor services provider UEM Edgenta Bhd has submitted a proposal to PLUS Malaysia Bhd seeking to maintain all of PLUS’ highways on a long-term basis.
The preliminary proposal highlights UEM Edgenta’s want for a mandate to maintain all the highways under the toll concessionaire including the 772km North South Expressway (NSE) for the remaining 21 years of the concession period.
“In return, UEM Edgenta is to invest in facilities to ensure that the cost of managing the highways are lower than the current structure,” said a source.
PLUS, which is Malaysia’s biggest highway operator, has eight highways under its belt.
The current concessions for all of the highways run until the end of 2038. The current maintenance cost of the highways under PLUS has come under the spotlight following a recent proposal by the Maju group to take over PLUS from its current owners, which are the UEM Group and the Employees Provident Fund.
Maju, a diversified group which itself owns and operates the Maju Expressway, has stated that it can manage PLUS’ highways without any toll rate hikes for the rest of the concession period. Its proposal to take over the expressways is mostly premised on the reduction of the current cost of maintaining the highways, which Maju contends is too high.
It says that the reduction in maintenance cost would be enough to mitigate any incremental revenue coming from toll rate hikes. According to sources, UEM Edgenta’s new proposal was based on the current performance of the highways and sought to ensure that maintenance and other requirements were met.
“The proposal is based on a performance-based concept (PCB). For instance, at the moment PLUS is the one which specifies how many people and machines are to be deployed for the cutting of the grass along the highways or for the resurfacing of the roads.
“Under PCB maintenance, UEM Edgenta and not PLUS will need to ensure that the grass cutting and resurfacing are done to meet with the requirements of the authorities.
“The current maintenance can do with less machines and manpower. With technology such as the Internet of Things, road maintenance can be done more efficiently,” said the source.
“UEM Edgenta, however, seeks a long-term contract for it to commit to capital investment for the maintenance of the highways,” he said. The source also said UEM Edgenta had quoted a figure of more than RM20bil in its proposal.
“But this is an initial amount based on global maintenance standards. The amount is expected to be substantially lower if the proposal is accepted.”
Among the investments that UEM Edgenta plans to make include setting up a road resurfacing research centre with the overall idea of bringing down cost helped by research.
The group also has plans to build its own plants along the highways which will process material for overall maintenance works. This is also to lower cost, said the source.
PLUS and UEM Edgenta share a common shareholder in the form of UEM Group which is ultimately owned by sovereign wealth fund Khazanah Nasional Bhd. At the moment, UEM Edgenta already handles some of the maintenance work for PLUS highways.
It is unclear which are the other parties also involved in maintaining the expressways. In UEM Edgenta’s latest annual report, it said that its subsidiary, Edgenta Propel Bhd, undertakes maintenance works for highways, roads, bridges and railways.
Edgenta Propel maintains over 2,500 km of highways and roads – including the NSE, New Klang Valley Expressway (NKVE), Federal Highway Route 2, Elite Highway, Malaysia-Singapore Second Link (MSSL), Penang Bridge, East Coast Expressway and Selangor state roads, it said.
PLUS is the largest highway concessionaire in the country, operating eight expressways under five concessions.
Its highways are the 772-km NSE which runs from Bukit Kayu Hitam in Kedah near the Malaysia-Thai border to Johor Baru, the NKVE, Federal Highway Route 2, the Seremban-Port Dickson Highway, the North-South Expressway Central Link, the MSSL, Lebuhraya Butterworth-Kulim and Penang Bridge.