RAM Ratings: Govt's nod to restructure concessionaires offers hope for highway sector

STAR

KUALA LUMPUR: The government’s agreement to a restructuring proposal involving four highway concession companies in the Klang Valley offers hope for the broader highway sector, said RAM Rating Services Bhd.

The proposal, which means no more toll rates hike for four highways in the Klang Valley, involves highway concessionaires Syarikat Mengurus Air Banjir dan Terowong Sdn Bhd (SMART Tunnel), Kesas Sdn Bhd (Kesas Expressway), Sistem Penyuraian Trafik KL Barat Sdn Bhd (SPRINT Expressway), and Lingkaran Trans Kota Sdn Bhd (Damansara-Puchong Expressway or LDP).

In a statement today, RAM Ratings said continued toll hike deferment in a single year was reportedly costing the government RM2.25 billion in compensation while its narrowing fiscal headroom makes the abolition of tolls implausible, considering the high compensation sums payable.

"Accordingly, Amanat Lebuhraya Rakyat Bhd (ALR), in offering to acquire highways partly owned by Gamuda Bhd, has, in our view, signalled a stronger intent by the government to seriously address the restructuring of toll rates across highways nationwide by end-2023, based on a parliamentary response by the Works Ministry.

"If successful, this restructuring model could serve as a blueprint for further renegotiations of other expressway concessions,” it said.

The rating agency said that ALR’s proposed solution to the impasse in the sector, via the acquisition of four highways partly owned by Gamuda for RM5.48 billion, would achieve different but complementary objectives including reducing the burden on the public from a cost inflation perspective.

The proposal also provides some respite against the government’s ballooning annual compensation bill for non-revision of scheduled toll rates, and takes into consideration the interests of other stakeholders including lenders and shareholders, RAM Ratings said.

The agency also noted that the tenures of the four highway concessions are expected to be restructured and lengthened. - Bernama