Taking the toll

ONCE again, PLUS Malaysia Bhd’s highways are on the crosshair of an interested party.

Businessman Tan Sri Abu Sahid Mohamed, who has a sprawling empire centred on steel companies, has indicated his willingness to snare PLUS from current shareholders UEM Group Bhd and the Employees Provident Fund (EPF).

UEM has a 51% stake in PLUS while the remaining 49% is held by the EPF.

His proposal is tantalising in a way that should the current shareholders of PLUS accept his offer, then the promise of no toll hikes for the duration of the concession is an interesting carrot for the government to consider.

How far the prospect of no toll hikes will hold is still up in the air, but the latest attempt to take over one of the best cash-generating businesses in the country goes to show how much leeway there is in squeezing profit from the lucrative highway operations.

The other element that needs to be considered is that with every subsequent rescue attempt by the government in the past, the one thing that keeps going up is the duration of the concession period.

It has been reported that under the original agreement, the concession would end next year. But because PLUS was the centrepiece of a bailout in the past, the concession period now has been extended to the end of 2038.

There is little doubt that had the concession ended next year, users of the highway will still have to pay a fee to use the road. But whether it will be the cost of the current toll is debatable, as there is little need to generate sufficient money to pay off the debtors of the company. Whatever toll that will be paid might have been enough to conduct maintenance work on the highway to ensure it remains in good condition.

With no toll increases being promised, the likelihood of another extension of the concession agreement might be likely. That might mean users will have to keep paying at least the current rates for some time beyond 2038.

Is the promise of no toll hikes sufficient? No businessman will want an asset if they cannot make a profit. The question that has been asked is whether the profit should remain with an individual or with a fund that is for the benefit of many Malaysians.