‘Maju Holdings offer not to raise toll for 20 years impossible’

KUALA LUMPUR: A senior university economics lecturer has described the offer not to hike toll for 20 years by a company bidding to take over PLUS Malaysia Bhd as “impossible”.

Dr Ahmad Rizal Mazlan of Universiti Utara Malaysia’s School of Economics, Finance and Banking said such an offer went “beyond economic and financial reality” because the upkeep of the 772km North-South Expressway (NSE) under PLUS kept increasing due to inflation, costs of materials and maintenance.

“I view it as impossible not to have any toll hike, particularly for such a long period as 20 years. The operating costs are about half a billion ringgit a year and will keep rising.”

The Works Ministry has said on average, the concessionaires are required to spend 45 to 50 per cent from their earnings for loan repayment, overheads and operation as well as repairs and upgrading.

Rizal’s comments came in the wake of the RM36 billion unsolicited bid by Maju Holdings Sdn Bhd to take over the country’s biggest highway toll concessionaire from UEM Group Bhd, which owns a 51 per cent stake in PLUS, with the remaining 49 per cent held by the Employees Provident Fund (EPF).

Besides the NSE, PLUS also runs seven other highways while Maju Holdings operates the Maju Expressway.

UEM and EPF have said they have no intention of selling their stakes.

Rizal said EPF should not sell a longterm investment like PLUS as this would be against the interests of its 14.5 million members.

“As far as PLUS is concerned, it has done a good job in maintaining and managing highways and is the best entity to (continue) managing it.

“There is no reason for EPF and UEM to dispose of PLUS because of the profits and contributions coming in, coupled with a steady volume and good cash flow. EPF should hold onto this asset as it is very difficult to find a replacement with such an asset profile.”

He said PLUS’ toll rate of increase of five per cent every three years despite higher operating and maintenance costs was also the lowest among all toll concessionaires because its present owners were government-linked entities and the government’s first priority was always the people. Bernama