‘PLUS STAKE SALE POSITIVE FOR GOVT’
Maju Holdings deal can relieve contingent liabilities by RM30b, says UiTM lecturer
THE government should seriously re-consider releasing its stake in PLUS Malaysia Bhd to Maju Holdings Sdn Bhd as the offer brings attractive proposition to the government.
While emphasising that the move would bring positive impact to the economy, Universiti Teknologi Mara (UiTM) senior lecturer Dr Baayah Baba also pointed out that the government would need to pay compensation to PLUS or any highway concessionaire in lieu of freezing toll rates.
“From back-of-envelope calculations, it would appear that PLUS has received substantial amounts of government compensation in lieu of freezing toll rates since 2005.
“By freezing toll rates for the remainder of the concession period, this will benefit the government and the rakyat, enabling road users to save the projected 48 per cent cumulative toll hike over the next 20 years,” she said in an interview recently.
Maju Holdings has sweetened its offer for PLUS by promising “no toll hike” for the next 20 years, when the concession agreement ends in 2038.
Baayah said without a 20-year toll rise for the country’s largest highway, this could benefit road users and would also facilitate business operations.
“Those who use PLUS can manage their expenses more effectively because there would be no increase in toll cost. Consumer goods prices should not go up with no increase in toll costs.
“This shows that all segments of society will receive a positive impact. All of these contribute to the rapid economic growth of the country,” she said.
Baayah said with the proposed acquisition, it was understood that Maju Holdings intended to relieve the government of enormous debt by reducing the latter’s contingent liabilities by RM30 billion and forfeiting toll compensation of RM900 million.
“Taking away this huge debt and contingent liability will create a healthier balance sheet for the country and allow for allocations for other necessary funds.”
Over the concerns that the deal would be negative for 14.5 million Employees Provident Fund (EPF) contributors as reported in the media, she said they would not lose out if EPF disposed of its investment in PLUS as it would receive a special dividend when Maju Holdings pay RM2 billion to EPF for the disposal.
Baayah said if PLUS did not raise its toll rates, the government would have to pay a compensation amounting to RM20 billion.
“On average, if you look at the toll rate increases in all expressways, RM20 billion will be collected over the next 20 years.”
Baayah also said a lower return for infrastructure assets could be expected, hence the owners of PLUS would not be disadvantaged as the deal offered a good equity return.
“An acquisition of this nature normally generates an internal rate of return of 20 per cent. Hence, Maju Holdings is offering a very handsome rate of return to the current owners of PLUS.
“As for the sukuk, Maju Holdings will offer to roll over its existing debt but with a higher yield.
“Indeed, the EPF’s responsibility is towards its contributors, but highway users are not limited to contributors. The highway is used by all Malaysians and its positive impact will be felt by all,” she said.