REASON TO REDUCE TOLL FARES,... A FACTUAL STORY

I just read this column Paying toll to sit through traffic jams and observe that there is apparently yet another development to the "Rising Toll Saga". It was mentioned that " A few weeks ago, rumours surfaced that some former employees of UEM Group want to take over PLUS. They want to bring down toll rates by at least 20% and do a lot more for the rakyat." This is coming after recent agreement by the Government and the Concessionaires to reveal the contents of the Toll Operations Agreements to the Public, and to the reluctance of the Governement to re-negotiate the lopsided contracts, and the need to pay compensation to the concession holders, in the event the contracts are breached, and toll fares not allowed to be increased, as per agreements. Much water has flowed under this "toll fare" bridge, and the arguments for both sides of the question will continue, to the frustration of the road using public.

Let me tell a factual story and put things in perspective. In 1996, one of the largest infrastructure construction and toll operations company in Malaysia, which I will call 'A', entered into a joint venture agreement overseas, with the government of an Asian country, which shall be 'B', to rehabilitate an existing segment of a highway, and to also construct new segments through one of the busiest sections of the country. Government B was responsible for the acquistion of land for the road, called the right of way(ROW), and Company A will bear all the construction costs, provide the systems and also training for the operations and maintenance of the completed highways. The joint venture agreement (JVA) signed between A and B, among other things, stipulated the Revenue Sharing arrangements. The JVA stipulated that until the construction costs, finance charges and interest have been FULLY recouped by Company A, the toll revenue (nett of operations costs) shall be shared in the ratio of 90:10 to A and B respectively. However, when those costs including loans, finance charges and interest have been fully recovered by A, the revenue (nett of operations costs) shall be shared in the ratio of 40:60 between A and B respectively. Unfortunately company A eventually disposed off the business to a local Investor, as Govt B could not raise the funds to acquire the ROW for continuation of the project.

Now what does the story tell us? It shows us undeniably that there is a need for concession companies in Malaysia to re-visit the toll rate, once they have collected sufficient revenue to repay their loans and other finance costs. It is then clearly immoral for these concession companies to continue raising toll fares, AND for the Government to approve it under those agreements. The fact that Company A in my story can agree to take a 50% less revenue in Country B after recovering their Finance costs shows that there is no need for such high toll fees, after the completion of construction of the expressways. It is not surprising then that the former UEM employees, in proposing to buy over PLUS, has also proposed to cut the toll rate by 20%.!!

The moral of the story? However which way the government decides to resolve the high toll fare issue for the public, the end result MUST be the drastic lowering of toll fares. We, the public have suffered for too long. Let us not wait longer...