Media Statement by Tony Pua, Member of Parliament for Petaling Jaya Utara and DAP National Publicity Secretary in Kuala Lumpur on Wednesday, 11 June 2014
In a written Parliamentary reply to DAP Puchong MP Gobind Singh Deo, Works Minister Datuk Fadhillah Yusof said the Kinrara Damansara Expressway (KIDEX) Concession agreement was signed last year and the concession is for 48 years. However, the Minister refused to confirm the toll rates, claiming it has “yet to be determined” and hence it was too soon to disclose the information.
While the 14.9km elevated highway concession may have been shockingly long at 48 years, in contrast with the 33-year 40km Lebuhraya Damansara Puchong (LDP), what is unacceptable is the Minister’s claim that the Government hasn’t a clue on the toll rates.
The Works Minister is either a complete fool to have signed a toll concession agreement for 48 years without an idea of how much toll will be charged and collected, providing the necessary return on investment to the concessionaire; or he is obviously lying to Parliament.
It is extremely reckless and irresponsible for the Federal Government to commit to a RM2.42 billion highway, without knowing how much the rakyat will be burdened for the use of the highway. Once the highway is completed, the Government will be held at ransom by the concessionaire and will as a result, be in a weaker negotiating position to demand lower toll rates. This is akin to making a contractual commitment to a house purchase from a developer at a project launch with the price to be decided only 3 years later after the project has been completed!
Moreover, how is it possible for a highway concessionaire to sign such an agreement with the Government without the certainty of knowing how much toll it will able to collect to generate a desirable investment return over the 48 years? How will KIDEX be able to go the banks to raise the necessary financing for the project? It must surely need to convince the bank that based on the traffic forecast and the toll rates agreed incorporating the scheduled toll hikes over the period, the company will make sufficient cashflow and profits to be able to repay its borrowings.
I have had the benefit of browsing through all privatised highway toll concession agreement in January 2009 when the Government decided to declassify these agreements for a period of 3 weeks. All of these agreements from the LDP to PLUS to the Penang Bridge, were signed not only with the toll rates fixed, even the formula for the periodic increase in toll rates based on the volume of traffic were specifically cast in stone in these contracts.
Hence I am convinced that the Federal Government is lying when claiming that no toll rates have been fixed in the concession agreement. It is more likely that the Government is conniving with the concessionaire to hide this information from the public to ensure reduced opposition and to leave the rakyat with a fait accompli once the highway is completed. By then any objections to the toll rate to be charged will be too late and futile.
While the highway may or may not be needed based on an elusive Traffic Impact Assessment yet to be submitted to the local authorities, the Selangor state government must not support the construction of another highway which unfairly burdens its citizens.
As an example, Lingkaran Trans Kota Holdings Bhd (LITRAK) which owns the LDP, earned RM180 million before tax on revenues of RM369 million for 2013. That’s a massive return of 48.6% per annum for a concession period that has been extended to 2030, before even taking into account future toll hikes.
Hence on this basis alone - the refusal by the Federal Government to be transparent with the projected investment returns for the concessionaire and the burden to be carried by the commuters - we call upon the Selangor statement government to suspend all approvals and decision-making processes required for the highway to be constructed in Selangor.
Tony Pua
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