Finance Minister Lim Guan Eng says the government's fiscal consolidation is on track as it targets to reduce the deficit from 3.7% of GDP in 2018 to below 3% by 2021.
PETALING JAYA: Road users can enjoy reduced toll rates if the proposed acquisition of four highways is materialised, says Finance Minister Lim Guan Eng.
Stressing that the conditional offer to acquire the Kesas, LDP, Sprint and Smart highways at a total cost of RM6.2bil was still subject to Cabinet's approval, Lim said the acquisition cost would be funded by a bond issuance that would be fully financed, and paid for from the collection of congestion charges.
He said it was better than paying RM18bil in compensation to concessionaires to stop imposing toll charges.
"Due to legacy issues from the previous government leading to financial constraints, the Federal Government cannot afford to fork out RM18 billion," Lim said in a statement.
Lim said the Federal Government had on June 21 made a conditional offer to acquire the four highways, pending Cabinet approval.
"I had (on June 22) outlined the benefits of the acquisition, including at least RM5.3 billion in compensation payments that would be saved by the Government, and up to RM180 million in annual toll savings for highway users.
"Highway users benefit by paying congestion charges, which is significantly reduced from the current toll charges.
"In principle, the Government will give discounts of up to 30% for hours outside of peak periods, and free travel during off-peak periods," he said.
He described the issuance of RM6.2bil bond as a "win-win" solution, as the government could save at least RM5.3bil in compensation.
The compensation for Kesas is RM1.3bil, while the LDP is RM2.4bil), Sprint is RM1.98bil and Smart is RM369mil.
The concession period for Kesas ends in 2028, while that of the LDP ends on 2030, Sprint in 2034 and Smart in 2042.
"Questions have also been raised as to why the Government should acquire the highways, as the concession period would expire within 9 to 23 years.
"Clearly, the immediate rationale will be that highway users would pay a reduced congestion charge that could save them RM180 million annually.
"Secondly, the concession period will not be extended after the expiry date.
"Thirdly, upon expiry, the congestion charges will be further reduced significantly to cover only the operating and maintenance costs, without any elements of profit," he said.
Lim said the conditional offers when approved by the shareholders and creditors of the four highway concessionaires would still be subject to Cabinet approval.
"This was clearly stated in my statement on 22 June 2019," he said.
Lim said the conditional offer was made after consulting professional banking consultants, in keeping with the Pakatan Harapan Government's commitment to fulfill their election manifesto "to take over highways and gradually reduce toll rates to ease public burden".
